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Buying gilts - which platform to use?
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Just be aware that on SWSD you will probably find that you don't get an immediate quote for your purchase. Instead you will have to place an order. As someone mentioned the order does come through quite quickly but you don't get the opportunity to see the price at which the deal is done before it is done. The variation from the price range you see before you place the order is probably minimal - especially for something like a conventional gilt. But it may be a feature which puts you off.
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Gilts are available on Freetrade's free subscription tier, it offers fractional gilts and during market hours trades execute immediately and wholly online. The only issue is that the range isn't great.
Freetrade also offers one month UK Treasury bills.
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You can figure out the coupon dates, because one is always the same as the date the gilt matures, and the other is 6 months away from that. Your example matures on 22 October 2026, so its coupon dates are 22 April and 22 October each year. So in this case, the penultimate coupon date is 22 April 2026 and the final one is 22 October 2026. (It might already be trading ex-dividend for the 22 April 2026 coupon—I'm not sure.)
This gilt pays 0.375% per year, so it pays half that, i.e. 0.1825%, on each coupon date. So whoever holds it on the ex-dividend date will be paid, on the coupon date, £1.875 for each £100 nominal value.
If you bought it between coupon dates, say just before it went ex-dividend, you will still receive the full £1.875 on the coupon date. But you will have paid the seller most of the next coupon as part of the cost of the purchase, shown as "accrued interest" on the contract note. E.g. if you paid them £1.80 in accrued interest, then when you receive the £1.875, £1.80 of that is just refunding what you already paid, and only the other £0.075 is taxable interest.
Or if you bought just after the gilt went ex-dividend, then you won't receive anything on the next coupon date (the seller will receive the £1.875). But the seller will have paid you, as a deduction from the purchase cost, accrued interest for the days you will be holding the gilt (from the settlement date of the trade to the next coupon date), e.g. £0.0075 per £100 nominal value. And that £0.0075 is taxable interest.
BTW, this is rather a lot to get your head round if you haven't done it before, and I doubt it's worth doing because of the tax rate going up by 2%! It is more likely to be worth doing if you're paying higher or additional rate tax on interest rather than basic rate, i.e. 40-47% rather than 20-22%. But if you're enjoying this, just like some people seem to enjoy chasing savings accounts paying fractionally higher rates of interest, then that could also be a good reason to do it!
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This is a random question (not relevant to me personally as I do a self assessment tax return). But how do you let HMRC know that you should be using the accrued income scheme to knock a bit off your interest receipt from a gilt? Let's say you get a consolidated tax certificate from your chosen platform (does that actually go to HMRC?). That will show the coupon received in the tax year. But it won't have a deduction for the accrued income you paid when you bought the gilt. You have to deduct that yourself. So if you aren't doing a self assessment do you just have to tell HMRC somehow?
Of course if the consolidated tax certificate does not go to HMRC then there is the separate question of how do HMRC know you have had the interest in the first place? Presumably there is a reporting obligation on you the tax payer. You can't just assume HMRC know about it the way they should know about bank and building society interest.
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that's a shame!
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i have not used this platform before so will look into it. i am planning to put a lot of money into gilts if i am taking them out of my savings account so security of the platform is very important, that is, how reliable is the platform for investing with them / giving them your money to invest with.
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my earnings fall into more than 100k a year, so i am in the higher rate band.
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my ex had invested in corporate bonds and you get similar things to this. when it comes to the self assessment tax return, you put in a note to explain the accrued interest that you had to pay when you bought the bond in the notes.
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Freetrade's owned by IG so I don't have any concerns about it.
https://www.londonstockexchange.com/stock/IGG/ig-group-holdings-plc/company-page
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Yeah not via BBSI but I think there's an income option in the personal tax site where you can tell them about other incomes which I think included gilts - I seem to remember doing it that way.
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