Most investors compare gilt yields before tax. YieldSmart shows the number that really matters — what lands in your pocket after income tax.
A 4.25% savings account pays a higher-rate taxpayer just 2.55% after tax. A low-coupon UK gilt at the same maturity can deliver 4% or more — because most of its return comes as capital gain, which is exempt from CGT. No credit risk. Backed by HM Treasury.
Read the full explanation →UK gilts are exempt from capital gains tax. Unlike most investments held outside an ISA or pension, any rise in a gilt's price — including the pull from a discounted price back up to £100 at maturity — is completely free of CGT. The coupon (the interest it pays) is still taxed as income at your marginal rate, but the capital gain is not.
That's why a low-coupon gilt trading below par is unusually efficient for a 40% or 45% taxpayer: most of its return arrives as that tax-free pull-to-par gain, and only the small coupon is taxed as income. A high-coupon gilt priced near £100 delivers almost all of its return as taxable coupon. So two gilts with the same gross yield can leave very different amounts in your pocket after tax.
Similar gross yields — but the low-coupon gilt leaves a 45% taxpayer with 4.33% versus 2.78%. To match that after-tax return, a fully-taxed bond or savings account would need a headline rate of about 7.9%. See TG33 →
What about corporate bonds? Most plain sterling corporate bonds are also exempt from CGT — they're qualifying corporate bonds (QCBs), so their gains aren't taxed either. The difference is credit risk: a company can miss a payment or default, whereas a gilt is a direct obligation of HM Treasury. A gilt gives you the same tax treatment without the default risk.
Core tools available without an account. Advanced features for serious investors.
Information only — not financial advice. Gilt prices are indicative from last available close and may be delayed. Verify before transacting. UK tax treatment depends on your circumstances and may change.