How to report income and gain from GILT?

I purchased Gilt on 13/5/2024 at 97.17% of the Gilt’s nominal value. The Gilt will be matured on 31/1/2025 with coupon rate at 0.25% p.a. I read the HMRC Guidance about Gilt’s taxation. The gain of that 2.83% (100%-97.17%) is exempted from tax. That 0.25% p.a. coupon gain should be reported as income. Is my understanding correct? What is the difference in tax reporting for the gain in capital between (a) I sell the Gilt before maturity and (b) I wait the maturity of Gilt and get back 100% of the nominal value? Both of them are exempted from tax? Thank you.

Hi Kolif,
Gilts' and 'Gilt strips' are not subject to Capital Gains Tax.
While waiting for the the gilt to mature, the investor is paid interest at a fixed rate, known as the 'coupon'.
This is reported as interest on a self assessment tax return (SA101).
The difference between the buying price and the selling price is also interest and is declared on SA101, boxed 1, 2 and 3 of page Ai1.
Have a look at HS343 to see if the accrued income scheme is appropriate.
Accrued Income Scheme (Self Assessment helpsheet HS343)
Thank you. 

Hi, thanks for your reply. I would like to further clarify the tax return between Gilts’ buying price and selling price/maturity value. According to your reply, although Gilts are not subject to capital gains tax, the difference between buying price and selling price/maturity value (+ 2.83% in my case) should be treated as interest as well and need to report on SA101 Box 1 & Box 3 of Ai1 as income. Is my understanding correct? If this is the case, how to report if buying price is higher than selling price/maturity value?

Hello, I am also interest in the answer to this...from everything else I have read including on HMRC here: https://www.gov.uk/guidance/gilt-edged-securities-exempt-from-capital-gains-tax it appears that Gilts should be exempt from CGT, whether sold or simply matured. Questions: 1. Is this not correct? 2. a. I undertstand that if the issue is a Deeply Discounted Security, or there is accrued interest to account for, there maybe some calculations that need to be done. 2.b. For DDS, once must account for accrued...understood but I don't believe this is a DDS. 2.c. For a non-DDS Gilt with a coupon, one may need to account for accrued interest, but this is usually done when selling the Gilt by paying or receiving the next coupon, so easy to split out into interest income. The rest of the change in price is simply Capital Gains, is it not? Thank you.

Hi Kolif,
This would result in a loss, so there would be nothing to declare.
Thank you. 

 

Hi PAT432518,

1. As per the guidance link you provided, it is exempt from CGT    
2. Deeply Discounted Securities’ (DDS) are government securities, commercial bonds and loan stock, where the amount paid on redemption is higher than the price at which they were issued. The difference is the discount and represents the whole or part of the reward to the holder of the security for the use of the money borrowed by the security issuer. Where certain conditions apply, the tax rules ensure that gains on such securities are taxed as income, rather than as capital gains.
   
   SAIM3010 - Deeply discounted securities

If you invest in deeply discounted securities, put the difference between what you paid for the bond and what you redeem or sell it for in box 3 of SA101 (page Ai1)

Thank you.

I think HMRC admin is not directing people to a quite important part of SAIM3010. I quote: ITTOIA05/S432 excludes certain types of security from being deeply discounted securities. These are company shares gilt-edged securities which have not been stripped (see SAIM3130 for more on strips) life assurance policies capital redemption policies. You have bought TN25, unstripped. There is no tax on the capital gain element, whether as capital gains tax, or as implied income.

Coming back to this topic, and asking for HMRC ADMIN to clarify as I am filling my 2023/2024 tax return. I bought a Gilt-edged security: UKT 0.125% which matured on 31 January 2024. I bought this Gilt at two different times after issuance, in both cases at a price below par, and I held it to maturity. I know that: - this is NOT subject to capital gains tax - this is subject to income tax As to income tax, I assume that I need to report the coupons received, minus any accrued interest I paid at the time of purchase. That said, this Gilt was issued at a price of 100.5020, i.e., above par, which means that someone buying it at issuance will have received a return which is lower than the coupons received. Am I able to deduct (at least part of) the difference between issuance price and redemption price for income tax purpose? And, hypothetically, had the Gilt been issued below par (but not qualifying as a deeply-discounted security), should I have reported (at least part of) the difference between redemption price and issuance price for income tax purposes? Many thanks in advance

Hi,
To report 'Interest from gilt-edged and other UK securities, deeply discounted securities and accrued income profits', you declare them on SA101 page Ai1, boxes 1 to 3. You can see guidance here: 
Additional information (2024)
Additional information notes
For an online returns, when tailoring your return, you tick 'yes'on page 2 of 3 for "Did you receive any other UK income, for example, employment lump sums, share schemes, life insurance gains?". When filling in your return, in the other UK income section, tick 'yes' to "Interest from gilt edge and other UK securities, deeply discounted securities and accrued income profits.
Thank you.