IFISAcava
Member of DD Central
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Post by IFISAcava on Mar 3, 2023 15:45:21 GMT
Sure, but it is a capital gain not income which is the main advantage for me, and the lack of fees means that (given my the sad state of my "limited" [aka negative] capital gains elsewhere) it is probably a better overall return on the short term bonds. Thanks for the IB nod, one of my favourite platforms. In that case it will definitely better for you indeed. You're welcome re: IB and thank you for the Wisealpha mention, it looks interesting for corporate bonds if the returns are indeed treated as capital gains, so I opened an account. not sure about the corporate bonds as they have higher coupons, which I would assume is treated as income, but obvz DYOR!
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james100
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Post by james100 on Mar 4, 2023 16:19:39 GMT
If non-ISA and no-easy access, and you are a high/additional rate taxpayer, a better alternative is buying low-coupon Gilts, as capital gains in Gilts are tax exempt. For example the 31/01/24 0.125% Gilt has a yield of 4.1% right now, which is about 4.05% after tax (only the very low coupon is taxed) for a 40%+ taxpayer. It's as safe as can be, and better than fixed term savings in that if you need to, you can sell it before maturity (which may result in losses if rates have increased in the meantime, but at least you have the option), or let it mature to get the guaranteed return. You would need rates in the region of 7% to match that after tax. Anyone have tips on where the best place is to buy gilts without large fees? I picked up some via Wise Alpha, as no fee for buying selling, but wary of putting all eggs in that basket. Gilts as in UK government bonds? Only CGT free if bought as individual gilts (not bundled)....maybe look at buying directly from the DMO www.dmo.gov.uk/responsibilities/gilt-market/buying-selling/purchase-sale-service/ That's all a bit convoluted and admin-heavy for my personal tastes. Easiest (for me) to purchase under an ETF such as IGLS (UK 1-5y) or for for a more diversified basket of gilt-equivalents I use SAAA (mixed country AAA/AA government bonds with average duration around 7y). For ETF (all gilt fund) CGT is applicable (with income taxable as interest instead of dividends).
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