(Bloomberg) -- A retail investment rush into the UK’s government bonds has sent purchases at the nation’s largest platform for private investors to the highest in four years.

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Trading in gilts by both volume and value was the most since 2021 in January, according to Hal Cook, a senior investment analyst at Hargreaves Lansdown Plc, which oversees £157 billion ($195 billion) of assets. He expects volumes to stay elevated due to high yields and tax advantages for wealthy Brits.

That follows a jump in the UK’s yields at the start of the year to the highest since 2008 amid concerns about the nation’s fiscal accounts — a move so sharp it led to pressure on Chancellor Rachel Reeves’ position. The trading also came as investors swapped low-coupon gilts to benefit from a tax quirk.

“It seems the opportunity presented by the spike in gilt yields in January was too good to miss,” said Cook. “We’re expecting February to be another popular month for gilt purchases.”

Low-coupon gilts have become favored by some retail investors as they only have to pay tax on the income and not on capital gains. That means the bonds can offer larger tax-exempt returns compared to higher-coupon ones, with those holding a gilt that matured on Jan. 31 now having fresh cash to invest.

“Many clients will have received their maturity payment last week and given continued elevated yields, reinvesting into another gilt may be attractive,” Cook said.

While the rise in yields globally has sparked retail buying in many bond markets, the tax advantages in the UK are an additional driver. That demand has made some low-coupon gilts relatively expensive.

The changes in the market have not gone unnoticed by officials: the UK has been offering more of these low-coupon gilts and hence locking in lower financing costs. Last month, the UK sold £1.5 billion of low-coupon notes maturing this time next year. The sale attracted the largest demand for a gilt tender in data going back to 2008.

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