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Does anyone put gilts in their ISAs?
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Jay P
Posted: 29 October 2024 11:40:53(UTC)
#12

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Mostly Retired;323699 wrote:
Does not feel efficient, for me, to put Gilts in ISA where I can shelter more useful gains and income. I hold low coupon shorter dated Gilts (T26, T26A) in my GIA and chosen for CGT tax efficiency, or at least I hope that will remain the case after this week!

I get that.
But, there came a point when with very little 'new' money left/ anticipated, it either meant not capturing an annual ISA allowance, or doing so without upsetting overall allocations.

Capturing another £20k of perpetual (one hopes) tax protection by higher coupon gilts in the ISA rather than, say, low coupon in a GIA, seemed a reasonable move. Use it or lose it was the mantra.

And anyway, tbh, a guaranteed tax free 4.7/5.0pc is a perfectly acceptable back up income from that part of the ISA for us.
With TR25 maturing in March, who knows where that cash will be next invested- tax free.
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L.P. on 29/10/2024(UTC), Mostly Retired on 30/10/2024(UTC)
Brockend
Posted: 29 October 2024 12:21:19(UTC)
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Yes, absolutely, and as our appetite for risk reduces I expect more of the equities we currently hold in ISAs will flow into gilts

We aim to hold gilts to redemption and when we started investing the 5% coupon stuff was offering a very slightly better return to redemption than the low coupon stuff so we bought the low coupon stuff in the general accounts and the higher coupon gilts in the ISAs. This seemed to be the most tax efficient way of holding them

I appreciate many of the die hard equity investors on the forum don't like gilts but without the benefit of a nice defined benefit pension and taking account our attitude to risk they seem to be suiting us...I just love the known exit value at a given point in the future, subject to HM Gov coughing up at maturity

Found this helpful https://www.yieldgimp.com/gilt-yields
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10 users thanked Brockend for this post.
Jay P on 29/10/2024(UTC), Sara G on 29/10/2024(UTC), Guest on 29/10/2024(UTC), Sheerman on 29/10/2024(UTC), Thrugelmir on 29/10/2024(UTC), L.P. on 29/10/2024(UTC), Tim D on 29/10/2024(UTC), Mostly Retired on 30/10/2024(UTC), Mr Bean on 03/11/2024(UTC), Jeff Liddiard on 15/12/2024(UTC)
SF100
Posted: 29 October 2024 14:48:48(UTC)
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Jay P;323711 wrote:

And anyway, tbh, a guaranteed tax free 4.7/5.0pc is a perfectly acceptable back up income from that part of the ISA for us.
With TR25 maturing in March, who knows where that cash will be next invested- tax free.


Rather than wait until Jan, you could sell all or part right now, and lock in 4.7% for the next 30 odd years...
Noted that you'd still get the accrued interest from since the last coupon was paid in July
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Jay P on 29/10/2024(UTC), L.P. on 29/10/2024(UTC)
Jay P
Posted: 29 October 2024 16:46:59(UTC)
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SF100;323735 wrote:
Jay P;323711 wrote:

And anyway, tbh, a guaranteed tax free 4.7/5.0pc is a perfectly acceptable back up income from that part of the ISA for us.
With TR25 maturing in March, who knows where that cash will be next invested- tax free.


Rather than wait until Jan, you could sell all or part right now, and lock in 4.7% for the next 30 odd years...
Noted that you'd still get the accrued interest from since the last coupon was paid in July

Indeed, thanks vm.

It's a very good point, and one I've been cogitating for a while as the longer gilt yields have increased somewhat.

Actually have been doing so in the SIPP with its long term horizon. I'm not wedded to the full 20% gilt allocation in the ISA particularly though, and currently plan to leave it to see where the markets are next year.
Unless TR43 hits 5% that is.
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SF100 on 29/10/2024(UTC), L.P. on 29/10/2024(UTC), Brockend on 29/10/2024(UTC)
L.P.
Posted: 29 October 2024 19:16:39(UTC)
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I never held gilts directly until the Truss budget and then everything changed.

In my ISA I purchased gilts with coupons ranging from 4.5 - 6% with the average yield in the high 4’s but a couple were around 5%.
I will be living off my investments within the next two years so with the gilts in my ISA, I have some guaranteed income over my 4% target withdrawal rate.

In my GIA I hold quite a few very low coupon short duration.

In a nutshell, if you need to make sure you have some guaranteed income, regardless of what happens to the value of one’s investments, then sticking some high coupon gilts in a tax free wrapper makes a lot of sense.

With gilt yields climbing closer to the period after the Truss budget… gift horses and mouths spring to mind.
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6 users thanked L.P. for this post.
Tim D on 29/10/2024(UTC), Guest on 29/10/2024(UTC), Jay P on 29/10/2024(UTC), SF100 on 29/10/2024(UTC), Brockend on 29/10/2024(UTC), Mr Bean on 03/11/2024(UTC)
L.P.
Posted: 29 October 2024 20:01:10(UTC)
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Jay P;323748 wrote:
SF100;323735 wrote:
Jay P;323711 wrote:

And anyway, tbh, a guaranteed tax free 4.7/5.0pc is a perfectly acceptable back up income from that part of the ISA for us.
With TR25 maturing in March, who knows where that cash will be next invested- tax free.


Rather than wait until Jan, you could sell all or part right now, and lock in 4.7% for the next 30 odd years...
Noted that you'd still get the accrued interest from since the last coupon was paid in July

Indeed, thanks vm.

It's a very good point, and one I've been cogitating for a while as the longer gilt yields have increased somewhat.

Actually have been doing so in the SIPP with its long term horizon. I'm not wedded to the full 20% gilt allocation in the ISA particularly though, and currently plan to leave it to see where the markets are next year.
Unless TR43 hits 5% that is.



T42 (4.5%) did actually hit 5% this time last year. I topped up at the time at around 94p but it did go to 93something.
Long duration could be back closer to 5% as early as tomorrow afternoon (4.70%ish at the moment).

Edit…
As per SF100’s suggestion regarding your TR25 (I hold a good chunk of the same), I will be watching the both the budget and gilt prices live tomorrow lunchtime ready to act.
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3 users thanked L.P. for this post.
Guest on 29/10/2024(UTC), Jay P on 29/10/2024(UTC), SF100 on 29/10/2024(UTC)
Jay P
Posted: 29 October 2024 20:41:21(UTC)
#18

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L.P.;323770 wrote:
Jay P;323748 wrote:
[quote=SF100;323735][quote=Jay P;323711]
/quote]



Long duration could be back closer to 5% as early as tomorrow afternoon (4.70%ish at the moment).

Edit…
As per SF100’s suggestion regarding your TR25 (I hold a good chunk of the same), I will be watching the both the budget and gilt prices live tomorrow lunchtime ready to act.


Very good points, thank you very much.
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L.P. on 29/10/2024(UTC)
L.P.
Posted: 31 October 2024 09:47:32(UTC)
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L.P.;323770 wrote:
Jay P;323748 wrote:
SF100;323735 wrote:
Jay P;323711 wrote:

And anyway, tbh, a guaranteed tax free 4.7/5.0pc is a perfectly acceptable back up income from that part of the ISA for us.
With TR25 maturing in March, who knows where that cash will be next invested- tax free.


Rather than wait until Jan, you could sell all or part right now, and lock in 4.7% for the next 30 odd years...
Noted that you'd still get the accrued interest from since the last coupon was paid in July

Indeed, thanks vm.

It's a very good point, and one I've been cogitating for a while as the longer gilt yields have increased somewhat.

Actually have been doing so in the SIPP with its long term horizon. I'm not wedded to the full 20% gilt allocation in the ISA particularly though, and currently plan to leave it to see where the markets are next year.
Unless TR43 hits 5% that is.



T42 (4.5%) did actually hit 5% this time last year. I topped up at the time at around 94p but it did go to 93something.
Long duration could be back closer to 5% as early as tomorrow afternoon (4.70%ish at the moment).

Edit…
As per SF100’s suggestion regarding your TR25 (I hold a good chunk of the same), I will be watching the both the budget and gilt prices live tomorrow lunchtime ready to act.


Here we go… 4.83% on 20yr gilts.

Another 0.5% and we were in Truss fiasco territory. Doesn’t say a lot for Reeves standing in the financial markets after her first budget.

High taxes - high spending - no growth is the markets view it seems.
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3 users thanked L.P. for this post.
Guest on 31/10/2024(UTC), Thrugelmir on 31/10/2024(UTC), Jay P on 31/10/2024(UTC)
Jez Hodgkins
Posted: 31 October 2024 13:15:56(UTC)
#21

Joined: 18/12/2023(UTC)
Posts: 5
It was all good news for ISA fans yesterday. No UK ISA to distract you and within the budget statement this nugget of gold:

5.58 Individual Savings Accounts, Lifetime ISA, Junior ISA and Child Trust Fund
Allowance – Annual subscription limits will remain at £20,000 for ISAs, £4,000 for
Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2030

So, no changes to the £20K for at least April 2030. My entire retirement strategy is based on feeding £20K into my ISA for the next 8 years, so I was mightily relived. I am planning on NOT taking any money out of the ISA, until my other investments are exhausted.
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Thrugelmir
Posted: 31 October 2024 13:32:47(UTC)
#7

Joined: 01/06/2012(UTC)
Posts: 5,331
MBA MBA;323648 wrote:
Thrugelmir;323646 wrote:
MBA MBA;323626 wrote:
I did this because our large mortgage renews in late 2026 and if rates are above 3% a part of me thinks I will use all the cash I have to reduce the size of the mortgage.


Are you referring to BOE base rate or mortgage borrowing rates? Era of cheap personal borrowing is rapidly drawing to a close.


Mortgage rates. Agree but even current rates are lower than pre 2000’s. However yes I think best case scenario is 5 year rates go to 3%.


Yesterday's budget may well have made that expectation even more remote. A Trump election win is highly likely to add further misery to the heavily indebted.
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