Gilt ladder

InvesterJones

SVaz said:

So TN28 is a better buy than TE28 ?

Depending on your tax circumstances and holding outside of a tax wrapper, it can be. Since you are holding inside a SIPP, it's not.

valiant24

SVaz said:

So TN28 is a better buy than TE28 ?

The overall Yield to Maturity is better for TE28 (4.24%) than TN28 (3.89%).
Because it's coupon is much higher, TE28's advantage would be offset by its less advantageous tax treatment.
But, you're holding the gilt in a SIPP, so that doesn't matter, and TE28 for you is a better buy.

OldScientist

Just to add to the discussion on comparing TE28 and TN28.

While the yield for TE28 is better (thanks to the tax treatment of coupons vs CGT as explained upthread), the total return is less certain where coupons will be reinvested since the reinvestment price is unknown (and will depend on future changes in yield etc.).

As an aside, back in the early 1980s, the difference on yields between high and low coupon gilts was large (e.g., 2.5 percentage points at a maturity around 5 years for gilts with coupons of 13.25% and 6.5%). The government actually issued low coupon gilts (3%) even though prevailing yields were up to about 16% in an effort to reduce debt repayments.