Qualifying corporate bonds

jinglebelljinglealltheway

Came across this when I was looking at gilts and tax friendly investment. But I am not able to find anything online. Was hoping for a list or some easier to understand language than the HMRC manual or its direct citation. Where should I be looking? Or do they exist at all? Thank you

InvesterJones

Hargreaves Landsdown say:

Profit on Gilts is free from capital gains tax (CGT). The majority of Sterling bonds are free from capital gains tax, providing that they are "Qualifying Corporate Bonds". Broadly speaking this means most bonds apart from convertibles; however it is best to check if any individual issue is disqualified from this. Note, caution should also be used with low or zero coupon bonds, where the capital gain may be viewed as income.

wmb194

jinglebelljinglealltheway said:

Came across this when I was looking at gilts and tax friendly investment. But I am not able to find anything online. Was hoping for a list or some easier to understand language than the HMRC manual or its direct citation. Where should I be looking? Or do they exist at all? Thank you

You're asking where to find sterling denominated corporate bonds and building society PIBs? Listed on the LSE. The problem is that there is not that much available to retail investors. Ten or so years ago the LSE introduced the Order Book for Retail Bonds ("ORB") but after a reasonable start it flopped because the likes of Tesco said putting together the enhanced prospectuses required for retail investors was more trouble than it was worth.

Gilts are also listed on ORB.

https://www.londonstockexchange.com/equities-trading/asset-classes/debt-trading/order-book-retail-bonds

I'm sure there used to be a better summary of bonds available on ORB but the LSE's website is abysmal. Hargreaves Lansdown might have a better list on its website.

https://www.londonstockexchange.com/live-markets/market-data-dashboard/price-explorer?categories=BONDS&subcategories=13

What qualifies:

https://library.croneri.co.uk/cch_uk/btr/559-100

jinglebelljinglealltheway

Thank you for your comments. So convertible, deeply discounted securities are for sure out. Looks like most bonds should qualify...barring the fine print in prospectus. I wish all these investment platforms or LSE would have a screen criteria for QCB. 

wmb194

jinglebelljinglealltheway said:

Thank you for your comments. So convertible, deeply discounted securities are for sure out. Looks like most bonds should qualify...barring the fine print in prospectus. I wish all these investment platforms or LSE would have a screen criteria for QCB. 

No execution only stockbroker/platform or the LSE will give you that as it might count as advice. 

Hoenir

Corporate Bonds are generally traded in a very thin market. You'd struggle to buy without placing an order and waiting for someone to match the trade. 

wmb194

Hoenir said:

Corporate Bonds are generally traded in a very thin market. You'd struggle to buy without placing an order and waiting for someone to match the trade. 

The ORB retail bonds have market makers. It was deliberately set-up this way in an attempt to ensure liquidity. Originally there were meant to be at least three per bond but the number may have shrunk.

Hoenir

wmb194 said:

Hoenir said:

Corporate Bonds are generally traded in a very thin market. You'd struggle to buy without placing an order and waiting for someone to match the trade. 

The ORB retail bonds have market makers. It was deliberately set-up this way in an attempt to ensure liquidity. Originally there were meant to be at least three per bond but the number may have shrunk.

There's only liquidity if there's stock being actively traded. Corporate bonds tend to be bought and held. 

Volumes in some equities are far lower than people imagine. In 2022 some 90% of global equity trading was conducted in just 110 stocks. Whereas in total there were some 60,000 public listed companies. 

wmb194

Hoenir said:

wmb194 said:

Hoenir said:

Corporate Bonds are generally traded in a very thin market. You'd struggle to buy without placing an order and waiting for someone to match the trade. 

The ORB retail bonds have market makers. It was deliberately set-up this way in an attempt to ensure liquidity. Originally there were meant to be at least three per bond but the number may have shrunk.

There's only liquidity if there's stock being actively traded. Corporate bonds tend to be bought and held. 

Volumes in some equities are far lower than people imagine. In 2022 some 90% of global equity trading was conducted in just 110 stocks. Whereas in total there were some 60,000 public listed companies. 

ORB bonds have market makers, they hold stock. For modest amounts I've never had any trouble dealing in them instantly.

jinglebelljinglealltheway

Back to the QCB criteria, a friend thinks it has to be direct purchase from issuers. Is this correct? If secondary market is out, there's really nothing out there. Well, just gilts. 

wmb194

jinglebelljinglealltheway said:

Back to the QCB criteria, a friend thinks it has to be direct purchase from issuers. Is this correct? If secondary market is out, there's really nothing out there. Well, just gilts. 

No, secondary market purchases are okay. He's probably thinking of VCTs.