Most investors compare gilt yields before tax. YieldSmart shows you the number that really matters — what lands in your pocket after income tax. For free.
Most people with cash to invest compare savings accounts, fixed-term deposits, and bonds by their headline rate. But that headline is almost always a gross figure — before tax. Interest on bank deposits is fully taxable as savings income, at your income tax rate. So is the coupon income on gilts. A 4.25% deposit rate becomes 3.40% after tax for a 20% basic-rate taxpayer, and just 2.55% for a 40% higher-rate payer. That changes the picture significantly.
When you look at a gilt's yield, you're looking at the gross redemption yield — also before tax. Income tax applies to coupon income at your rate — 20% for basic-rate payers, 40% for higher-rate. But gilts have an additional dimension that deposits don't: some of their return comes as capital gain rather than income, and that gap between gross and net can be managed by choosing the right gilt.
Here's the key insight: a gilt trading at a low cash price delivers most of its return as capital gain rather than coupon income. Capital gains on gilts — and on qualifying corporate bonds — are exempt from CGT. But unlike corporate bonds, gilts carry no credit risk. You are lending to the UK government, which has never failed to pay. A corporate bond offering the same post-tax yield as a low-coupon gilt is asking you to take on credit risk — the risk the company defaults — for no additional after-tax return. That's a bad trade.
This is what makes low-coupon, deep-discount gilts compelling from a tax perspective: they deliver a tax-efficient return structure without the credit risk of corporate bonds. The effect applies to any taxpayer, and it's especially pronounced for higher-rate payers where the income tax drag on high coupons is largest. That said, gilts are not without risk — interest rate risk and, critically, inflation risk are real considerations, especially for longer maturities. YieldSmart shows you the after-tax yield comparison clearly; the risk assessment is yours to make.
Investment
Net yield (40% taxpayer)
Gross yield
Price / Rate
Credit risk
2-year fixed deposit (bank)
2.55%
4.25%
4.25% AER
Bank credit
TR27 — 4.25% Treasury 2027 (high coupon gilt)
3.27%
4.35%
£99.92
UK govt
TG27 — 1.25% Treasury 2027 (low coupon gilt)✦ best
4.12%
4.64%
£96.49
UK govt
Example for a 40% taxpayer, using comparable 2-year maturities (indicative prices, 8 May 2026). The bank deposit pays 4.25% gross but only 2.55% net — every penny of interest is taxable. Both gilts mature in December 2027. The low-coupon gilt wins: its return is skewed towards capital gain rather than taxable income. Use our calculator to see the numbers at your own tax rate. The high-coupon gilt does better. The low-coupon gilt wins decisively: most of its return comes as capital gain rather than taxable income, delivering 4.69% net. All gilt returns are backed by the UK government — no bank or corporate credit risk.
The deposit comparison
Your savings account is costing you more than you think.
Bank deposits feel safe and simple. You put money in, the bank pays you interest, and you know exactly what you'll get. But that interest is fully taxable at your income tax rate — there is no capital gain element, no tax-free component, no exemption. Every pound of interest goes through your tax return.
A basic-rate (20%) taxpayer earning 4.25% on a 2-year fixed-term deposit keeps just 3.40% after tax. A higher-rate (40%) payer keeps only 2.55% — because every penny of deposit interest is taxable savings income. Meanwhile a low-coupon UK gilt — backed by the government, not a bank — can deliver substantially more after tax to both, because most of its return arrives as capital gain rather than taxable income.
There's also a risk dimension worth stating plainly: bank deposits carry bank credit risk. The FSCS protects up to £120,000 per institution (increased from £85,000 in December 2025), but beyond that you are an unsecured creditor of the bank. UK gilts carry no such risk — they are direct obligations of HM Treasury, and the UK government has never defaulted.
None of this means deposits are bad — for short time horizons, instant-access needs, or amounts within FSCS limits they remain sensible. But for money you can lock away for a year or more, the after-tax comparison with gilts is often striking, and most investors have never seen it done properly. That's what YieldSmart is for.
Risks to understand
Gilts are low risk. But not risk-free.
UK gilts are among the safest investments available — the UK government has never defaulted, and there is no credit risk in the conventional sense. But safe is not the same as risk-free. There are real risks every gilt investor should understand.
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Inflation risk — the main risk of any fixed return
Inflation is the most important risk for any savings product — deposits, gilts, or bonds. It applies to all of them. A 4.25% deposit rate or a 5% gilt yield both look attractive today, but if inflation runs at 4% your real return is thin, and if it runs at 5% your purchasing power is standing still. You cannot know what £100 will buy in five or ten years, let alone thirty. This risk is more acute for bank deposits than gilts in one respect: deposit rates reset — sometimes to very low levels — whereas a gilt's yield is locked in at purchase. But the fundamental uncertainty about purchasing power is shared by all fixed-income investments. The further out the maturity, the greater that uncertainty. This is yours to weigh; YieldSmart shows nominal yields only.
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Interest rate risk
If you need to sell before maturity, the gilt's market price will have moved. When rates rise, gilt prices fall — and the longer the maturity, the larger the move. A 30-year gilt can lose 20–30% of its market value in a rising rate environment. If you hold to maturity this doesn't matter — you receive face value. But if circumstances force an early sale, you may crystallise a loss. Modified duration — shown in our gilt table — tells you precisely how sensitive each gilt is.
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Liquidity risk
The UK gilt market is one of the most liquid in the world at an institutional level. For retail investors buying through brokers, the practical cost is the bid-offer spread. On short-dated gilts this is typically small. On very long-dated or less actively traded gilts it can be wider. Always check the spread before trading, and factor it into your total cost.
The further out you go
Inflation is the risk that compounds quietly.
Inflation erodes purchasing power silently. A bank deposit at 4.25% feels safe — but if inflation is 3.5%, your real return is just 0.75%. And when the deposit term ends and rates have fallen, you may roll into something paying far less. At least a gilt locks in a known nominal return for a defined period. That certainty has value, even if the real return is uncertain.
A 2-year gilt is a reasonably predictable investment — you have a decent sense of what inflation will do over two years, and the interest rate risk is modest. A 30-year gilt is a very different proposition. You are locking in a nominal return over a period in which energy prices, technology, geopolitics, and monetary policy could all shift dramatically. The nominal yield might be 5.5% — but if inflation averages 4% over that period, your real return is just 1.5% per year.
Going heavily into a single long-dated gilt on the basis of today's yield carries real inflation risk that deserves honest thought. A laddered approach — spreading maturities across 2, 5, 10 and 20 years — manages this better than concentrating in one maturity. YieldSmart shows nominal after-tax yields. It cannot show real yields — because nobody knows what inflation will be. That uncertainty is part of the decision, and it is yours to make.
What we built
Three free tools, one clear picture.
YieldSmart gives you the same analysis that institutional fixed income desks use — without the Bloomberg terminal, the jargon, or the fees.
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Gilt Table
Every conventional UK gilt in issue, with gross yield, net yield at your tax rate, grossed-up equivalent, running yield, modified duration, and more. Sortable, filterable, and updated daily from live market data.
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Yield Curve
See the full UK gilt yield curve plotted at each gilt's exact maturity date — with both gross and after-tax net yield shown simultaneously. Watch the gap between the two lines change as you adjust your tax rate.
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After-Tax Calculator
Select any gilt and see your precise after-tax yield, annual income, and capital gain. Compare it against an equivalent corporate bond to understand exactly what the CGT exemption is worth to you in pounds.
Coming into its own
The Bond Ladder — predictable income, tax-optimised.
A bond ladder is a portfolio of gilts with staggered maturity dates. Each one matures in turn — returning your capital — which you can spend or reinvest into a new gilt at the long end of the ladder. It's one of the most effective strategies for generating predictable, low-risk income in retirement or in the years building up to it. And because every rung is a UK government bond, there is no credit risk anywhere in the portfolio.
Our Bond Ladder Builder lets you construct a ladder from real UK gilts, with your tax rate applied throughout. It ranks gilts by net yield rather than gross yield — so it naturally steers you towards the low-coupon, deep-discount gilts that deliver the most tax-efficient return structure. You see the annual after-tax income for each rung, the capital gain returned at each maturity, and a blended net yield for the whole portfolio. All backed by the UK government with no credit risk. The staggered structure also helps manage inflation risk — you're not committing everything to one point in time.
Who it's for
Built for people who manage their own money.
YieldSmart is for self-directed investors who want to make better decisions — not be sold products. You don't need a financial background to use it, but if you have one, you'll recognise the rigour behind it.
🏦 The ISA & SIPP investor
You're maximising your tax wrappers each year and want to understand whether gilts make sense inside or outside them — and which specific gilts give you the best risk-adjusted return. Our tools show you net yield in a general account, ISA, and SIPP side by side.
🎯 The higher-rate taxpayer
At 40% or 45%, the difference between gross and net yield is material. A 1% after-tax yield advantage on a £50,000 investment is £500 per year. YieldSmart makes these differences visible so you can act on them.
🪜 The income planner
You want predictable income — for retirement, for a big future expense, or just for peace of mind. The bond ladder builder lets you design a gilt portfolio that returns cash to you at regular, known dates, with no credit risk.
💰 The cash saver
You have money sitting in savings accounts or fixed-term deposits and you're wondering if you're leaving money on the table. The short answer: if you pay income tax, you probably are. YieldSmart shows you exactly how gilts compare to your deposit rate after tax — in your hands, not on paper.
📚 The curious learner
You've heard gilts are worth looking at but aren't sure where to start. YieldSmart explains each concept as it appears — the running yield, the yield curve, what modified duration means — without assuming you already know.
Why we built this
Institutional insight, for everyone.
The background
YieldSmart was built by a team with deep experience in professional fixed income markets — working across the full spectrum of institutional investors in Europe, from pension funds and insurers to asset managers and hedge funds.
The tools retail investors had access to weren't good enough. So we built better ones.
In institutional fixed income, after-tax yield analysis is standard. Every credit desk knows that the gross yield is just the starting point — what matters is what the investor keeps, which depends on their tax position, their wrapper, and the structure of the instrument.
For retail investors, this kind of analysis was essentially unavailable. Most tools showed gross yield and stopped there. The CGT exemption on gilts — one of the most tax-efficient features of any UK investment — wasn't reflected anywhere in the tools ordinary investors could access.
YieldSmart changes that. We built the calculations that institutional desks use, made them work for any income tax rate and any account type, and put them on a page anyone can open on their phone. No login, no subscription, no catch.
This is just the beginning. We're building more tools — ISA optimisers, income projectors, portfolio trackers — all with the same philosophy: give retail investors the analysis they deserve.
Portfolio context
Gilts and equities: better together.
Gilts are not just an alternative to cash savings. They can play a distinct and valuable role alongside equities in a broader investment portfolio — and understanding that role can help you think more clearly about how much to hold and why.
⚖️ Low correlation to equities
Gilts and equities tend to move differently — sometimes in opposite directions. When equity markets fall sharply, gilts often hold their value or rise as investors seek safety. This low correlation means adding gilts to an equity portfolio can reduce overall volatility without necessarily sacrificing long-run returns. It's one of the core principles behind balanced portfolio construction.
🔒 Known cash flows
Unlike equities — where dividends can be cut and share prices can fall by 50% — gilts pay known coupons on known dates and return face value at a known maturity. That predictability is genuinely valuable, especially as you approach retirement or have a specific future expenditure in mind. You can plan around gilt cash flows in a way you simply cannot with equities.
🛡️ Capital preservation
If you hold a gilt to maturity, you get your face value back — guaranteed by the UK government. Equities carry no such guarantee. For money you cannot afford to lose — a house deposit, a school fees fund, retirement income — gilts offer a level of capital certainty that equities do not. That certainty comes at the cost of lower expected long-run returns, but for the right portion of a portfolio, that trade-off makes sense.
📅 Sequencing risk management
One of the biggest risks for investors approaching retirement is sequence of returns risk — a sharp equity fall just as you start drawing down your portfolio can be devastating. Holding a ladder of gilts maturing over your early retirement years means you can fund spending from gilt maturities rather than being forced to sell equities at depressed prices. This is one of the most practical uses of a gilt bond ladder.
The practical point: gilts are not a replacement for equities — over the long run, equities have delivered higher real returns. But holding 100% equities means accepting high volatility and no certainty about what your portfolio is worth at any given moment. A portfolio that combines equities for long-run growth with gilts for stability, income, and capital certainty is a more resilient one. How much to hold in each depends on your time horizon, risk tolerance, and income needs — that is a personal decision. What YieldSmart helps you do is make the gilt portion of that decision as tax-efficiently as possible.
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YieldSmart provides information and tools only — not financial advice. Gilt prices are indicative from last available close. Always verify before transacting. Tax treatment may change. If in doubt, speak to a qualified financial adviser.