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Costs of Dealing
Unlike money-deposit investments, where there is usually no cost either in depositing or withdrawing, the buying and selling of marketable fixed-interest securities does involve certain costs. For government gilt-edged investments they include the following:
Stamp duty on transfer form Exempt
Contract stamp 10p to 60p on contracts over £100.
Brokerage (commission At the rate of 0.625% of the contract
charged by stockbroker) with a minimum of £4 per trans-
action between £200 and £640. VAT is payable on this.
- Investments
- National Savings Certificates
- Fixed Interest Investments
- Investments and Tax
- Cost of Dealing
Local Authority Loans
Many local authorities borrow money both in the money market and by public issues in much the same way as the central government. These loans are secured by a charge on the local rates of the authority, which makes them only slightly less secure than government stock. The yields are therefore marginally higher than government gilts.
Some short-dated non-negotiable local authority mortages can be bought at par direct from the local authority concerned. Longer-dated negotiable loans can be bought and sold on the Stock Exchange on lines similar to those for government stocks.
Limited... see: Local Authority Loans