Gilts FAQ

A gilt is a bond issued by the UK government. You pay a market price now. In return you receive a fixed coupon, usually twice a year, and £100 for every £100 of nominal you hold when the gilt matures. The UK Debt Management Office issues them. You can sell on the market before maturity; the price then is whatever buyers will pay, which can be above or below what you paid.

This site covers conventional gilts only. Index-linked gilts are not included.

The capital gain is. A disposal of a gilt-edged security is exempt from UK capital gains tax (Taxation of Chargeable Gains Act 1992, section 115). If you buy below £100 and redeem at £100, that pull to par is not charged to CGT. Losses are not allowable either.

The coupon is not tax free. Interest is savings income, taxed at your marginal rate. A higher-rate taxpayer has a £500 personal savings allowance; an additional-rate taxpayer has none. gilts.app does not model that allowance, the starting rate for savings, or an ISA. It taxes every coupon at the rate you select (0%, 20%, 40%, or 45%).

• Clean price is the quoted price per £100 nominal, excluding interest built up since the last coupon. It is the number on a broker screen.
• Accrued interest is the seller’s share of the current coupon. You pay it on top of the clean price. It is negative when the gilt is ex-dividend, because the seller keeps the next coupon.
• Dirty price is clean plus accrued. That is the cash that leaves your account.

gilts.app ranks gilts using the dirty price, because that is what you actually pay.

The gross redemption yield (GRY) is the annual return if you buy at the current price and hold to maturity, before tax. Coupons are assumed to be reinvested at the same yield. gilts.app quotes it on the gilt-market semi-annual convention, the same basis the Debt Management Office uses.

It is not the coupon, and it is not the return you keep after tax.

Net return is the annual return if you buy at the dirty price, hold to maturity, pay tax on the coupons at the rate you selected, and pay no capital gains tax on the gain to £100. Selling before maturity can produce a different result, including a loss.

It is the headline rate on a taxable savings account that would leave you the same amount after tax. gilts.app calculates it as net return divided by (1 − your tax rate). A gilt with a 3% net return at 40% tax is shown as a 5% equivalent gross rate, because 5% taxed at 40% is 3%.

Use it to compare a gilt with a savings APR. It is not a rate the gilt pays you.

Most of a low-coupon gilt’s return, when it trades below par, arrives as a capital gain. That gain is free of CGT. The coupon, which is taxed, is small.

A higher-coupon gilt with a similar gross yield pays more of its return as taxable interest. After 40% or 45% tax, the low-coupon gilt often keeps more. That is the whole idea: shift the return from taxed income into untaxed capital gain by holding a discounted gilt to redemption.

It works on the tax rules above, and only if you hold to maturity. It is not a view on whether gilt prices will rise. If you sell early, the price can be lower than you paid and the CGT exemption does not turn a market loss into a gain.

People who pay higher-rate (40%) or additional-rate (45%) tax on savings interest, have cash they can lock up until a known maturity, and are comparing gilts with taxable savings rather than with equities. At 0% or inside an ISA the coupon is not taxed, so the low-coupon tilt matters much less. A basic-rate taxpayer still benefits, but the gap versus a high-coupon gilt is smaller.

If you hold more than £5,000 nominal of gilts, interest you pay on purchase is relieved against tax, so the first coupon is taxed only on the part earned after you bought. The checkbox on the main table turns that relief on. It changes the after-tax return only slightly, and mainly for higher coupons. Leave it off if you are under the threshold.

Yes, if you sell before maturity and the price has fallen. Held to maturity, a conventional gilt redeems at £100 nominal; the remaining risk is that the UK government does not pay, which the market treats as very low, not as zero. Inflation can still cut what that cash buys. Nothing here is a guarantee of the yield shown.

Reference data (name, coupon, maturity, dividend dates) comes from the UK Debt Management Office under the Open Government Licence. The DMO stopped publishing gilt prices in 2017. Live quotes on this site currently come from Boerse Frankfurt and are labelled with that source. They are not the Tradeweb closing prices used as the UK benchmark, and they can lag or differ from your broker.

No. gilts.app is a calculator and a ranking, published by AtelierLelu. It is not a broker, not authorised to advise you, and not a personal recommendation. Tax law and your circumstances can differ from the simplified rate used here. Check the position with a regulated adviser or HMRC before you act.