Most Tax Efficient Gilt Today

wmb194

MoneyMan01 said:

I was looking at it from the point of view of seeing if I can make the purchase in such a way, that it reduces the need entirely to do a self assessment form.

My theory, T26 for example matures on 30/01/2026, so on the basis that a "T27" did get launched, purchasing it on 01/02/2026 would mean you get both coupon's (2x 6 month payments), without the need of paying anyone else what they are owed, and vice versa, making things a lot cleaner. Or does it not work like that?

I think about the closest you'll get to that in the secondary market is to buy on the ex-dividend date but to achieve what you want you'd need to buy them at issue. It's unlikely the dates will line up so perfectly, though.

According to Bloomberg, brokers Hargreaves Lansdown and Interactive Investor offer this to retail investors.

"Retail investors can now buy newly issued UK gilts at the same price paid by banks at government auctions. Previously, these investors could only buy the bonds at secondary-market prices. Investors need to open an account with UK investment platforms Hargreaves Lansdown or Interactive Investor. 12 Mar 2024"

https://www.bloomberg.com/news/articles/2024-03-12/uk-gilts-how-retail-investors-can-buy-government-bonds-at-auction-prices

MoneyMan01

That has answered my question to a degree. I was wording it badly. Yes, I mean purchasing them at issue.

Given I am not a retail investor, I guess that it would not be possible for me to purchase them at issue via auction.

wmb194

MoneyMan01 said:

That has answered my question to a degree. I was wording it badly. Yes, I mean purchasing them at issue.

Given I am not a retail investor, I guess that it would not be possible for me to purchase them at issue via auction.

Normal people are retail investors. Investment companies, governments, banks and the like are institutional investors.

MoneyMan01

I see. I will add that to my reading list!

InvesterJones

gravel_2 said:

My own gilt noob question - if one were to put £10k into a low yield gilt does that trigger SA requirement or is there a less formal way to report the nominal income derived from the gilt? I know it's possible to report certain types of income via personal tax account but looking at it I'm not sure there's a natural home for gilts on there.

It would take significantly more than £10k in low yield gilts to earn more than £10k interest/coupon payments in a single year.

gravel_2

InvesterJones said:

gravel_2 said:

My own gilt noob question - if one were to put £10k into a low yield gilt does that trigger SA requirement or is there a less formal way to report the nominal income derived from the gilt? I know it's possible to report certain types of income via personal tax account but looking at it I'm not sure there's a natural home for gilts on there.

It would take significantly more than £10k in low yield gilts to earn more than £10k interest/coupon payments in a single year.

That's half an answer. So the 10k level applies to gilts as well? I assume there is no equivalent to savings accounts automatic reporting by brokers on gilt income so it's still not fully clear to me how that should be addressed with HMRC.

Is it simply a case of working out the net income from gilt (after accounting for accrued interest) and reporting that through the personal tax account as additional income? There's no need (and nowhere) to report gross figures and accrued values? Just report net plus personal bookkeeping in case it's ever interrogated?

I appreciate I am asking how to report, in case of T26 and £10k notional, £12.5 annual income but I understand I am required to disclose this income somehow. It can't be ignored simple because it's tuppence.

masonic

gravel_2 said:

InvesterJones said:

gravel_2 said:

My own gilt noob question - if one were to put £10k into a low yield gilt does that trigger SA requirement or is there a less formal way to report the nominal income derived from the gilt? I know it's possible to report certain types of income via personal tax account but looking at it I'm not sure there's a natural home for gilts on there.

It would take significantly more than £10k in low yield gilts to earn more than £10k interest/coupon payments in a single year.

That's half an answer. So the 10k level applies to gilts as well? I assume there is no equivalent to savings accounts automatic reporting by brokers on gilt income so it's still not fully clear to me how that should be addressed with HMRC.

Is it simply a case of working out the net income from gilt (after accounting for accrued interest) and reporting that through the personal tax account as additional income? There's no need (and nowhere) to report gross figures and accrued values? Just report net plus personal bookkeeping in case it's ever interrogated?

I appreciate I am asking how to report, in case of T26 and £10k notional, £12.5 annual income but I understand I am required to disclose this income somehow. It can't be ignored simple because it's tuppence.

Brokers do report data on both income and disposals to HMRC. That's how all the "nudge letter" nonsense involving the use of money market funds at DeGiro and subsequent reports to HMRC of inflated disposal figures came about. But you cannot rely on investment providers to declare for you.

You only need to register for self assessment if you meet the criteria set out in the questionnaire on the gov.uk website. To declare untaxed income when not on SA, then you have the choice of PTA, letter or phonecall.

ChilliBob

Gilts at issue wise, bear in mind you probably won't know the price! I got all excited that II had this as a new offering, but then when I realized you basically got whatever price and didn't know in advance it put me off really. The thing I like about Gilts, assuming you intend to hold to maturity, and believe the UK Government won't default, is that you know exactly where you are and what you're in for so to speak. A blind price didn't do it for me! Happy to buy used Gilts lol 

MoneyMan01

ChilliBob said:

Gilts at issue wise, bear in mind you probably won't know the price! I got all excited that II had this as a new offering, but then when I realized you basically got whatever price and didn't know in advance it put me off really. The thing I like about Gilts, assuming you intend to hold to maturity, and believe the UK Government won't default, is that you know exactly where you are and what you're in for so to speak. A blind price didn't do it for me! Happy to buy used Gilts lol 

That’s good to know, thanks.