Direct Gilts can represent a smart alternative to cash for higher and additional rate taxpayers.
Whilst coupons are taxed at income tax rates, gains in the value of a Gilt are CGT-free.
This makes the effective comparable yield on near-term, short-duration Gilts more attractive than Cash Deposits for higher and additional rate taxpayers.
Finally by buying Gilts issued by HM Treasury, this resolves counterparty risks and FSCS limits.
Find out more...
1. Read the article on our Insights page
2. Watch the CISI endorsed CPD Webinar
3. Contact Us for to request a consultation (for UK advisers only)
Are there any zero coupon gilts?
Whilst Gilt-Edged Market Makers can "strip" gilts into indvidual cash flows to create, in effect, a zero coupon gilt, there are few if any gilts that are issued by the DMO specifically as Zero Coupon Gilts.
What is the return on Zero Coupon Gilts?
Zero Coupon Gilts could be issued at a discount to their nominal / face value, such that the return to the investor is the capital gain on from the discounted priced paid at purchase and the nominal value received on the maturity date, if held to maturity.
Whilst coupons are taxed at income tax rates, gains in the value of a Gilt are CGT-free.
This makes the effective comparable yield on near-term, short-duration Gilts more attractive than Cash Deposits for higher and additional rate taxpayers.
Finally by buying Gilts issued by HM Treasury, this resolves counterparty risks and FSCS limits.
Find out more...
1. Read the article on our Insights page
2. Watch the CISI endorsed CPD Webinar
3. Contact Us for to request a consultation (for UK advisers only)
Are there any zero coupon gilts?
Whilst Gilt-Edged Market Makers can "strip" gilts into indvidual cash flows to create, in effect, a zero coupon gilt, there are few if any gilts that are issued by the DMO specifically as Zero Coupon Gilts.
What is the return on Zero Coupon Gilts?
Zero Coupon Gilts could be issued at a discount to their nominal / face value, such that the return to the investor is the capital gain on from the discounted priced paid at purchase and the nominal value received on the maturity date, if held to maturity.