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Savers, can you use gilts to earn 8%? | Standing charge to be scrapped & budget preview

The Martin Lewis Podcast

Hosted by Martin Lewis

47m
Transcript

Original podcast

Summary

Written by a model from the transcript; not yet reviewed.

This episode of the Martin Lewis Podcast covers alternative ways for savers to earn higher returns, specifically through buying short-dated UK gilts. Joined by Hilary Wynn, Investment Director at AJ Bell, the host explains how purchasing gilts below their maturity value can generate tax-free capital gains that rival high-interest savings accounts for basic, higher, and top-rate taxpayers. The discussion also evaluates the risks involved, the mechanics of buying through platforms, and when gilts make sense compared to cash savings. Additionally, the episode previews the upcoming government budget, including expected moves to scrap gas standing charges alongside potential support packages for vulnerable energy users.

  • Short-dated UK gilts can offer tax-free capital gains that rival high-interest savings accounts for higher-rate taxpayers. 18:38
  • Investors should generally hold short-dated gilts to maturity to avoid market volatility and price fluctuations. 28:50
  • The government is considering removing standing charges from gas bills, which would lower costs for lower energy users. 1:58

Chapters

  1. 0:00
    Podcast Intro and Advertisements

    The episode begins with a brief ad-supported introduction and a playful ad for Whole Foods Market.

  2. 0:33
    AI Assistant Promotion – Claude

    Advertisement for Claude AI, highlighting its capabilities for business tasks and integration with tools.

  3. 2:11
    Martin Lewis Introduces Main Topic

    Martin Lewis launches the episode, announcing the focus on short‑dated UK gilts and related budget news.

  4. 5:15
    Standing Charge on Gas and Electricity

    Martin explains the concept of standing charges, their impact on consumers, and the government's plan to scrap them.

  5. 15:55
    Closing Remarks and Final Takeaways

    The episode wraps up with final thoughts on gilts, budgeting, and a reminder to stay informed about upcoming financial changes.

  6. 17:14
    Tax Treatment and Risk of Gilts vs Savings

    The discussion covers the tax advantages of gilts, the risk profile compared to savings accounts, and the importance of holding to maturity.

  7. 26:00
    Budget Preview and Policy Implications

    Martin outlines key budget items, including standing charge removal, student loan repayment freeze, and the state pension tax issue.

  8. 28:15
    Using Gilts Within a Stocks and Shares ISA

    Hilary and Martin discuss whether gilts should be held in a stocks and shares ISA and the practicalities of buying them on investment platforms.

  9. 32:46
    Gilt Ladders for Income Planning

    The hosts explain how gilt ladders work, their use for retirement income, and how they can provide a steady cash flow.

  10. 42:01
    Mastermind Segment – Real‑world Money‑Saving Stories

    Listeners share personal anecdotes about using credit cards, gift cards, and other tactics to save money, with Martin providing commentary.

  11. 44:40
    Student Loan Repayment at State Pension Age

    Discussion on whether student loan repayments continue after reaching state pension age and the conditions for maintenance loans.

  12. 45:35
    Student Loan Wipe‑out Rules by Plan

    Explanation of when student loans are written off under different repayment plans and the impact of income thresholds.

Highlights

  • 3:45

    A Life Without Musicstory

    The host discusses his lack of interest in buying music albums, noting that he prefers information and data over music.

  • 5:55

    Scrapping Gas Standing Chargesinsight

    The host breaks down the Prime Minister's announcement to look into removing standing charges from gas bills to help with household energy costs.

  • 10:12

    Budget Predictions for Energy Supportinsight

    The host predicts that removing gas standing charges will be paired with an intervention package like doubling the Warm Home Discount to protect vulnerable high users.

  • 16:02

    How Short-Dated Gilts Workstrategy

    The host explains that gilts are loans to the UK government where investors buy below face value and receive the full amount at a fixed maturity date.

  • 18:38

    Calculating Gilt Tax Advantagedata

    An example shows a gilt yielding a 10.1% total gain over two and a quarter years that is entirely free of capital gains tax.

  • 23:50

    Assessing Gilt Risk Versus Savingsdebate

    Hilary Wynn and the host discuss whether gilts count as investments rather than deposits, noting they are backed by the UK government if held to maturity.

  • 36:23

    Financial Advisors Without Musicstory

    The host and co-host discover that an outside financial advisor named Alison also does not listen to music, joking that it is a trait common in financial services.

  • 45:58

    Student Loan Repayment Rulesinsight

    The host clarifies that under Plan Five student loans, debt is wiped 40 years from when repayments were first due, rather than at state pension age.

Quotes

  • “That gilt today, and it may have moved a bit since I last checked, but within pennies, costs £90.80, and at maturity, you will get £100, it always works on the £100.”
    Martin Lewis · 18:25
  • “That is tax-free, totally tax-free.”
    Martin Lewis · 19:06
  • “is £308 a year for gas and electricity. £108 of that is gas, £200 of that is electricity.”
    Martin Lewis · 6:13
  • “So if all of those conditions were fulfilled, there's very little difference on there, de minimis on there.”
    Unnamed speaker · 25:38
  • “It is not about trading in guilts. It's not about long or non-ended dated guilts. It is short dated guilts, which will define as, let's say, five years or less.”
    Martin Lewis · 27:20
  • “you are repaying nine percent of everything you earn above twenty five thousand pounds.”
    Martin Lewis · 46:31
  • “If you started between nineteen ninety eight and two thousand and five in England, Wales and Northern Ireland, your loan is wiped when you hit sixty five.”
    Martin Lewis · 45:42
  • “So the key for many people who take loans later and student loans later is when your income drops, you may have less income than the threshold.”
    Martin Lewis · 46:35
  • “You could start university with pension income under twenty five thousand pounds and know you'll never be repaying a penny if you took the loans.”
    Martin Lewis · 47:11
  • Whole Foods Market 0:06–0:33
  • Claude 0:47–2:24
  • Claude 49:41–50:50
  • Amex Corporate 50:53–51:06

About this episode

This week on The Martin Lewis Podcast, Martin dives into two big money stories making headlines: the government's plans to cut standing charges from gas bills and what could be coming in the next Budget. The week's main topic tackles short-dated gilts. Many investment advisers are recommending them as a potentially more lucrative alternative to savings, and done right, the returns can be the equivalent of earning around 8% in a savings account. Martin is joined by a specialist expert to explain how they work, the risks to watch for, and to answer your questions. Then it's over to your stories in our Tell Us feature, where we're asking: when did taking a different financial route from the norm pay off for you? From using a 0% credit card instead of a loan to leasing rather than buying, we'll hear the unconventional decisions that saved listeners money. Mastermind combines student finance and Star Wars. And, because no episode would be complete without a surprise or two, Martin Lewis sings. Yes, really.

Transcript

0:00
47:53

10,232 words · 8 speakers

Speaker names marked are inferred from speaking time and the show’s known hosts — they are not voice-verified.

Topics

  • UK government
  • savings account
  • AJ Bell
  • BBC
  • Citizens Advice
  • short-dated gilts
  • stocks and shares ISA
  • Star Wars
  • Plan Five
  • Hargreaves Lansdown

Page updated · transcript and summary are machine-generated