Gilts and accrued interest in self-assessment 2024-5

kidwell25

I'm doing a self-assessment for the first time and just want to be sure I'm treating my gilts correctly. I didn't have any gilts prior to April 2024. I bought the following in the 24-25 tax year on these dates. I've included the accrued interest shown on the respective contract notes

Date	Gilt	Accrued interest
17/04/2024	T26	2.96
19/08/2024	T26A	14.66
05/11/2024	TR43	31.8
20/12/2024	TR43	25.58
07/01/2025	TR43	53.09
15/01/2025	TR43	58.95
Total		187.04

Because of the timings, I didn't receive any coupon on the TR43 that year, and my coupons on the T26 and T26A only totalled £35.65. So in the section on interest from gilts, when I'm asked for the gross amount before tax, should that be MINUS £151.39?

DRS1

No

Ignore TR43 until 2025/6 (just don't forget about it).   You can offset the T26 and T26A figures in 2024/5.

SnowMan

The accrued interest is deducted from the next coupon after purchase, and the tax year when that next interest payment (coupon) after purchase is paid determines which tax year is relevant

The first interest payment on TR43 after purchase is 22/4/2025 (and that applies to all 4 purchases). So the first taxable interest payment is the 22/4/2025 interest payment that falls in the 2025/2026 tax year. For 2024/2025 there is no interest from TR43 to include. In a year's time for 2025/2026 you will include the actual interest payments paid on 22/4/2025 and 22/10/2025 less the accrued interest on purchase  of 169.42 (= 31.80 + 25.58 + 53.09 + 58.95).

For T26 the first interest payment (coupon) after purchase was 30/7/2024. And the second and only other interest payment in the 2024/2025 tax year was on 30/1/2025. So you calculate the first interest payment less the accrued interest (2.96) plus the second interest payment as the relevant interest figure.

For T26A the first interest payment after purchase was 22/10/2024 and that was the only interest payment in the 2024/2025 tax year. So you calculate the first interest payment less the accrued interest (14.66) as the relevant interest figure.

In the Additional Information part of the tax return leave boxes 1 and 2 blank and fill in box 3 with the amounts above for T26 and T26A. Based on your figure for the total coupons paid on 30/7/2024, 30/1/2025 and 22/10/2024 of 35.65, it's 18.03 (= 35.65 - 2.96 - 14.66) that should be entered in box 3.

poseidon1

SnowMan said:

The accrued interest is deducted from the next coupon after purchase, and the tax year when that next interest payment (coupon) after purchase is paid determines which tax year is relevant

The first interest payment on TR43 after purchase is 22/4/2025 (and that applies to all 4 purchases). So the first taxable interest payment is the 22/4/2025 interest payment that falls in the 2025/2026 tax year. For 2024/2025 there is no interest from TR43 to include. In a year's time for 2025/2026 you will include the actual interest payments paid on 22/4/2025 and 22/10/2025 less the accrued interest on purchase  of 169.42 (= 31.80 + 25.58 + 53.09 + 58.95).

For T26 the first interest payment (coupon) after purchase was 30/7/2024. And the second and only other interest payment in the 2024/2025 tax year was on 30/1/2025. So you calculate the first interest payment less the accrued interest (2.96) plus the second interest payment as the relevant interest figure.

For T26A the first interest payment after purchase was 22/10/2024 and that was the only interest payment in the 2024/2025 tax year. So you calculate the first interest payment less the accrued interest (14.66) as the relevant interest figure.

In the Additional Information part of the tax return leave boxes 1 and 2 blank and fill in box 3 with the amounts above for T26 and T26A. Based on your figure for the total coupons paid on 30/7/2024, 30/1/2025 and 22/10/2024 of 35.65, it's 18.03 (= 35.65 - 2.96 - 14.66) that should be entered in box 3.

This thread is a good example as to why higher yielding gilts are best held via ISA accounts.

The record keeping, reporting and tax compliance for both purchase and sale of gilts will be complicated for many newbie investors in that sector.

DRS1

Of course the accrued income scheme doesn't just apply to gilts.

poseidon1

DRS1 said:

Of course the accrued income scheme doesn't just apply to gilts.

Certainly corporate bonds caught as well, but very few investors venture into that sector compared to gilts.