A Chartered financial planner at Kellands, and a fellow of the Chartered Institute of Securities and Investment. Joshua helps individuals and businesses to meet their long-term financial goals, and shares a few of the common questions.

Are there low-risk investment options that can potentially offer better-than-cash returns?

If you are looking for better-than-cash returns on your savings over a short period, with a relatively low risk profile, UK government bonds (gilts) could well be the answer.

After the constant rises in interest rates, 2022 saw the worst-ever recorded drop in the price of gilts below their face value. Current prices now allow you to make a capital profit when the gilt redeems at the end of its term, which becomes attractive for higher and additional rate taxpayers.

Are there any tax advantages for these over bank deposits?

Any uplift in capital on a gilt investment is free of capital gains tax (CGT) for UK individual investors, providing a useful tax-mitigation benefit, particularly for higher-rate or additional-rate taxpayers.

For example, at the time of writing, an additional rate tax payer, would need to earn an equivalent gross interest of about 8% from their UK high street bank or building society savings deposits to achieve the same net-of-tax return as a portfolio of gilts held at their current prices until redemption.

What are the potential investment risks/investor protection in UK gilts? 

Gilts are issued by the UK government, which has never failed to repay domestically issued debt. However, as with all investments, the value of your portfolio and the income can fluctuate so you may not get back the amount originally invested unless held to maturity. Unlike savings deposits, there is no cap on Financial Services Compensation Scheme (FSCS) protection. Therefore, you can invest £10m in a gilt and enjoy the equivalent protection as investing £85,000 at the time of writing, in a UK savings account.