Index-Linked Gilts question

masonic

gatters said:

I don't have any technical analysis, but a potential reason a retail investor could use ILGs...

A 40 year old set to receive state pension from 2053 could buy some ILGs maturing in the years beforehand to bridge the gap between retirement and state pension.

Based on Yieldgimp, today buying £8k of TR50, £7k of TG51 and £7.2k of TG52 would effectively buy 3 years of single lock state pension before age 68. 

I'm sure the money could be put to better use, but if ISA limits, annual allowance, taxes on taxable investments etc are limiting things it doesn't seem a completely stupid idea. 

Yes, I think there could be a case if the investor would otherwise be limiting equities due to risk tolerance, and very few go 100% equities. If aiming for 60:40 or even 80:20, I suppose there'd be no reason why part or all of the allocation shouldn't be made up of liability-linked individual holdings.

aroominyork

I dipped my foot into ILGs this morning, selling conventionals TN25 & TG31 and replacing them with T29. The contract note from Interactive Investor only shows the clean price with an interest payment of £23k, so how do I know the amount of accrued interest I have paid on the dirty price for the purpose of my next tax return?

GeoffTF

You can set up a free account with Tradeweb. The accrued interest for your trade will be the number for the next working day after your trade multiplied by 34,038.67. I always ask the dealer for telephone trades, but HL, iWeb and AJ Bell all show the accrued interest on their contract notes.

DRS1

aroominyork said:

I dipped my foot into ILGs this morning, selling conventionals TN25 & TG31 and replacing them with T29. The contract note from Interactive Investor only shows the clean price with an interest payment of £23k, so how do I know the amount of accrued interest I have paid on the dirty price for the purpose of my next tax return?

That is interesting.  HL show the price paid as the dirty price with a separate (small) amount for the accrued interest.  I wouldn't try setting off £23k against your next interest payment if I were you.

It won't be much help to you but GiltsYield shows the clean price as 97.81 the accrued interest as 0.049 (143 days) and the dirty price as 166.299.  You might be able to use the 0.049 figure for accrued interest.

GeoffTF

DRS1 said:

It won't be much help to you but GiltsYield shows the clean price as 97.81 the accrued interest as 0.049 (143 days) and the dirty price as 166.299.  You might be able to use the 0.049 figure for accrued interest.

Tradeweb has taken over from the DMO the official source of historical data. You could try phoning II, but that will not give you a record for HMRC. I would recommend using a broker that provides proper contract notes. I use HL for unsheltered gilts.

aroominyork

DRS1 said:

aroominyork said:

I dipped my foot into ILGs this morning, selling conventionals TN25 & TG31 and replacing them with T29. The contract note from Interactive Investor only shows the clean price with an interest payment of £23k, so how do I know the amount of accrued interest I have paid on the dirty price for the purpose of my next tax return?

That is interesting.  HL show the price paid as the dirty price with a separate (small) amount for the accrued interest.  I wouldn't try setting off £23k against your next interest payment if I were you.

It won't be much help to you but GiltsYield shows the clean price as 97.81 the accrued interest as 0.049 (143 days) and the dirty price as 166.299.  You might be able to use the 0.049 figure for accrued interest.

GeoffTF said:

DRS1 said:

It won't be much help to you but GiltsYield shows the clean price as 97.81 the accrued interest as 0.049 (143 days) and the dirty price as 166.299.  You might be able to use the 0.049 figure for accrued interest.

Tradeweb has taken over from the DMO the official source of historical data. You could try phoning II, but that will not give you a record for HMRC. I would recommend using a broker that provides proper contract notes. I use HL for unsheltered gilts.

I phoned ii yesterday. Lots of holding while they checked... it should be manually updated quickly but so far hasn't been. Thanks for giltsyield.com - I hadn't come across it before and it provides sufficient evidence should HMRC ask why I have offset £16.65! (Using HL would add cost and complication - not for me, but thanks.)

PS They have now written that "when trading index-linked gilts, the Contract Note will display the clean price, not the dirty price. This is standard practice on our platform." And my portfolio's market value on ii is also based on the clean price so is showing £33,095.80. Oh well...