Interactive Investor - calculation of 25% tax free cash when holding Index Linked Gilts

michaels

Lowtrawler said:

Another disappointment. AJ Bell have confirmed they apply the same treatment as Interactive Investor.

The Ombudsman has confirmed my complaint and I will advise when there is any progress.

I am seeing a real inheritance tax opportunity here

Lowtrawler

Further bad news. HL have also confirmed they use the clean price when it comes to the PCLS.

Charles Stanley appears to be the only area of hope although I haven't confirmed with them personally, relying on the discussion earlier in this thread. I will wait for the Ombudsman to rule before reviewing my options.

Personally, I think it's crazy the 3 biggest SIPP platforms cannot value IL gilts accurately, at least on key events like a PCLS. How they can claim the clean price is a market price when 4 IL Gilts have a dirty price more than twice the clean is quite beyond me.

It would be entirely possible for me to hold £300k of IL Gilts (when valued at the dirty price) and £100k in cash, expecting to take the £100k cash as a PCLS, only to find the gilts being valued at £150k  and so finding my PCLS limited to £62.5k. Let's see what the ombudsman says.

TheGreenFrog

Have you pointed out to ombudsman that CS manages to value them correctly?  

Lowtrawler

TheGreenFrog said:

Have you pointed out to ombudsman that CS manages to value them correctly?  

I think I would need to confirm with CS this is the case before doing so. Frankly, the legislation requires platforms to create a market value for the PCLS and I don't believe the clean price counts as a market value. Anyone who understand IL gilts is likely to agree with me.

I haven't even addressed the potential for inheritance tax planning. If the platforms do the same valuation as part of an estate, anyone with assets should probably hold T30I. The dirty price is almost 3x the clean and so remove almost 2/3rds the value for inheritance tax.

DRS1

I think T30I may be a bad example - that is an old gilt and they can give you a clean price which is much nearer the dirty price  337.8 vs 339.167 according to this
Gilts in Issue - giltsyield.com

Lowtrawler

DRS1 said:

I think T30I may be a bad example - that is an old gilt and they can give you a clean price which is much nearer the dirty price  337.8 vs 339.167 according to this
Gilts in Issue - giltsyield.com

You're correct, TR8F seems to be a good bet though at more than 2x clean

kempiejon

michaels said:

I assume no one else is thinking this sounds like a potential inheritance tax dodge....

I thought it, now it seems to have leaked out.

Hoenir

TheGreenFrog said:

Have you pointed out to ombudsman that CS manages to value them correctly?  

Charle Stanley are stockbrokers ( members of the London Stock Exchange)  who can deal directly on the market. Correspondingly platforms are not.  

If you buy an orange it's never going to be an Apple. No amount of complaining can change rudimentary facts. 

michaels

kempiejon said:

michaels said:

I assume no one else is thinking this sounds like a potential inheritance tax dodge....

I thought it, now it seems to have leaked out.

I wonder if an executor is allowed to rebalance a portfolio while probate is taking place?  Edit - apparently it is the value on date of death that matters

Partially on this topic - am I correct in thinking that although II nominally split a pot into crystallised and uncrystallised components, you can not actually manage the assets in the two pots separately  (for example more growth orientated in the uncrystallised, more defensive in the crystallised)?  Are there platforms that separate the two pots?  I currently have a mix of assets and in theory would like to crystallise some of them into a crystallised pot and leave others in an uncrystallised pot.

leosayer

kempiejon said:

michaels said:

I assume no one else is thinking this sounds like a potential inheritance tax dodge....

I thought it, now it seems to have leaked out.

Seems like tax evasion to me, if you are aware that your platform undervalues IL gilts.