Why UK Government Bonds Are a Great Investment Choice

If you’ve used up your ISA and SIPP allowance in a given tax year then buying single UK government bonds (gilts) is a very tax efficient way to invest. So in this video, I look at the tax benefits and give you examples of how buying single bonds can help you as an investor. I also show you some tools that will help you choose the right gilts for you.

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Timestamps
00:00 Introduction
00:27 Why Choose Single Government Bonds
01:44 Yields Higher
04:35 No Capital Gains Tax
05:51 Yield Curve
07:28 Low Coupon Is Tax Efficient
09:02 UK Gilt Yield Curve Tracker
10:18 Go For Yield in ISA or SIPP
11:20 Where To Buy Them
11:59 Not For The Long Term

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DISCLAIMER
All information is given for educational purposes and is not financial advice. Ramin does not provide recommendations and is not responsible for investment actions taken by viewers. Figures that are quoted refer to the past and past performance is not a reliable indicator of future results.

[DesVids]

Any chance of a video on how bond ETFs work? Not much out there on this subject, at least not much quality content.

[Banthah]

This guy is amazing. The absolute king of these type of videos.
I came here wanting to know what a bond was. Now I know when I should buy them, the total yield to maturity, the most tax efficient way to exploit the yield, both in and out of an ISA, and where and how I can buy them.
Masterclass!

[stevegeek]

I’ve built a small ladder of UK gov bonds within my ii SIPP over the last few months (I’m close to retirement) and I’m very happy with how they are performing so far. I have a range of maturities from 2026 to 2034 paying between 4.75 and 6% yield. They have all gone up in value, between 0.5 and 2.5% in 2 months. Today I received my first dividend payments from 2 of them; nearly £800 from £30k of bonds. Since it’s within my SIPP I’m not worried about tax on the interest. Having the low risk compared to equities definitely helps me sleep at night, although I still have majority of my SIPP invested in global equities to give me the long term growth (hopefully!).

[servedarkness]

Living outside the UK but still learning stuff about bonds here, thank you.

[JanetMorgan]

Managing money is different from accumulating wealth, and the lack of investment education in schools may explain why people struggle to maintain their financial gains. The examples you provided are relevant, and I personally benefited from the market crisis, as I embrace challenging times while others tend to avoid them. Well, at least my advisor does too, jokingly

[oneworldcafe]

Thank you for your great content. You can get 6.2% in a one year fix. I think that is paying more than capital gains free Gilts depending on your marginal tax rate.

[rodclarke]

Just what I needed Ramin, much obliged, thank you!!

[joaopauloneto]

Great video! I'm from Brazil and was looking for information about UK Government Bonds, how they work and how they are different from Brazil's. The video was very informative and clear! I have one little note, though. I think that UK Government Bonds (or other government bonds of strong and mature economies) are good investments for the long term, because of their safeness. Now I agree stocks perform better and should be where the majority of the capital is invested in. However, I think it is important to have some of the long term investment allocated in safer and less volatile investments, such as UK Government Bonds. Thank you for the video!

[AndrewGAlonzi]

Thank you, thIs is a very interesting video and good explanation! I also enjoy your weekly podcast.

[markleslie]

Thanks Ramin, another brilliant informative video!

[svalbard]

Would love to hear your take on the Birmingham bankruptcy. Does it affect how you might think about municipal bonds? Or just an outlier?

[hw]

Was so much looking forward to this video. Great explainer on all the details. Thanks

Although I was trying to do this from within a company rather than personal and it was difficult to find a broker that would be suitable for this as I wanted to park some cash like that

[johnjackson]

Hi, I'm really enjoying your content. Could you do a video explaining offshore funds and management of them please?

[Benji_The_Ghoul]

This is a great joke to start the day with, thank you :)

[tk]

Hi Ramin.

Love you videos mate. Couple of points:

1. Halifax Share Dealing allow you to buy UK Gilts, has to be done via phone.
2. UK Treasury Bills are a type of UK Gilt that do NOT benefit from the zero CGT.

Hope that helps!

[amrelhady]

You can place an order with Halifax online, but the trade isn't executed right away. They calculate the accrued interest offline separately, so executed price can vary slightly.

[xjcrbss]

Barclays Smart investor runs on AJ Bell - I am looking to buy on there and appreciate your video

[pelocitdarney]

FYI Halifax offer gilts in their general investment, ISA and SIPP accounts.

[jamiebell]

Many thanks for this video, very useful. One quick question...if you get £7k in coupon returns in a single tax year and you have a savings allowance of £2k then what tax do you pay (a) 20% of the difference ie 20% of £5k, as a tax on savings over an above your allowance or (b) add the £5k to your annual income and then pay the tax due on total income from salary and savings for the year?
thank you :)

[TomsPersonalFinance]

I don't have to worry about using up my ISA and SIPP allowances any time soon... but interesting video nonetheless 😊

You really are the bond master haha