What to do? - high rate tax payer £25k bond maturing

[Greenmantle]

I have a £25k fixed rate bond maturing this month with NS&I.
I have been offered a 1 year bond at 5.15% AER.
My big concern ever since 4th July is that the tax burden on this will increase to a level which will be unacceptable.
To that end I have been looking at UK Treasury Gilts with minimal coupon since I don't need the income stream - say TN28
AJ Bell or HL seems the way to go!

What do people think?

[The Leaper]

I would have thought that tax on £1287 for a higher rate tax payer is of only modest concern.

I'd go for the 5.15% which is a very good rate and pay the tax, or Premium Bonds. I assume you have used your ISA limit for 2024/5.

FWIW, I have just had an FRB mature with a value about the same as yours. I'm an additional rate tax payer (just), so I'm planning to top up my PBs.

R.

[Greenmantle]

The Leaper said:

I would have thought that tax on £1287 for a higher rate tax payer is of only modest concern.

I'd go for the 5.15% which is a very good rate and pay the tax, or Premium Bonds. I assume you have used your ISA limit for 2024/5.

FWIW, I have just had an FRB mature with a value about the same as yours. I'm an additional rate tax payer (just), so I'm planning to top up my PBs.

R.

thanks for your reply
the difference is about £200 per year between this fixed rate bond and moving to a low coupon gilt.

[ferret50]

I cannot help you, but try posting your question here,

https://forum.qandamoney.co.uk/categories

[MaxFromage]

Greenmantle said:

thanks for your reply
the difference is about £200 per year between this fixed rate bond and moving to a low coupon gilt.

Some people don't care about £200, others do. It's incredibly easy to buy the gilt, so I would do that. I've used HL in the past.

If you want to put your tin foil hat on, the only concern would be if the Govt decide to fiddle with ISAs and also do the same with gilts.

Edited by MaxFromage on Monday 2nd September 20:03

[Armitage.Shanks]

I’m rolling mine over into the 5.15% offer for another 12 months. To me that’s less hassle.

[Greenmantle]

MaxFromage said:

Greenmantle said:

thanks for your reply
the difference is about £200 per year between this fixed rate bond and moving to a low coupon gilt.

Some people don't care about £200, others do. It's incredibly easy to buy the gilt, so I would do that. I've used HL in the past.

If you want to put your tin foil hat on, the only concern would be if the Govt decide to fiddle with ISAs and also do the same with gilts.

Edited by MaxFromage on Monday 2nd September 20:03

With the backlash from the winter fuel allowance I think fiddling with the ISAs maybe a step too far. The industry would have a backlash since it would be too costly to enforce any sort of limit (number of or amount) across multiple providers.

Gilts they won't touch. I would actually say that for Gilts its a "Jerry Maguire Show me the Money" moment and they would want to attract as much money as possible to ease their fiscal burden during this term of parliament. Gilts is primarily an institutional financial vehicle and they certainly wont want to be on the wrong side of them "Liz Truss"!

The allowances and tax rates on savings will definitely be up for grabs. In their mind anyone having savings of £25k or more is definitely not in their "normal working class" bracket.