premium bonds and / or GILTS as a tax shelter

olb81

it would make sense as a way of holding the cash until the next isa tax year is available

its either that or go straight into the index funds, but in a GIA which would require paying dividend tax

AI advised me to buy the income version of the funds for a GIA as its a lot easier to calculate tax as the payments are made outside the fund

masonic

Dividends are quite a small part of the growth of a global index fund, but you do also have to consider capital gains.

The main reason to favour the income version is for capital gain calculation, which is much easier if you don't have to subtract all of those dividends in the accumulation version.

If you are comfortable with the risk, then keeping 76% (ish) of your equity fund total returns is likely to beat the return from a low coupon gilt or premium bonds over the long term.

There is of course a chance that a crash will come along and you'll be able to Bed & ISA before crystallising any meaningful net capital gain.

InvesterJones

https://forums.moneysavingexpert.com/discussion/comment/82147577#Comment_82147577

That depends on your platform - some provide detailed reports for you so you can avoid any time out of the market (or potential transaction costs if the platform charges) with acc.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82147551#Comment_82147551

Well assuming you don't benefit from the starter rate for savings you'd certainly want some of that £145k in a cash ISA.

If the £100k is on top of that then if you put it in a savings account and got 5% interest you'd be paying £1100 in tax on it. So premium bonds and TN28 would be better than that from a tax point of view. You could think of TN28 as an alternative to a 15 month or 18 month fixed rate bond from a building society.

It is a less obvious alternative to VWRP. I think it would most obviously be something someone would think about when they had already been invested in VWRP for a decade or so and they thought it was becoming a bit "toppy" or risky so they want something more conservative to preserve the gains they have already made. Then they might sell some VWRP and buy TN28. But sitting here today with cash and mulling whether to buy VWRP or TN28? Not really. If you are contemplating VWRP then you are contemplating investing not saving. People may tell you investing is better than saving but only you can decide if that is what you really want to do. If you are after investing then TN28 isn't really it.