Top 10 gilts: all the data you need

Demand for direct gilts has shot up over the past couple of years, as rising yields have attracted buyers looking to generate a secure return from the UK government.

Secondary market gilt purchases on the ii platform jumped 50% in 2024 compared with the year before, with low-coupon gilts trading at a discount to their redemption value proving the most popular.

• Invest with ii: How Bonds & Gilts work  |  What is a Managed ISA?  |  Buy Bonds

Gilts can be tricky to understand. Because they trade on the secondary market (buying and selling before maturity via an investment platform), gilt yields are constantly shifting – conventional gilts have fixed coupons, set at issue, but the price of the bond determines your yield if you plan to hold the gilt to maturity.

Another quirk of gilts is that there is no capital gains tax owed on any profits made when selling a gilt, or receiving their £100 redemption value. Coupons, however, are taxed as income.

• There’s more information on how gilts work here
• Building a ‘gilt ladder’ – everything you need to know

There are around 100 gilts in issue today, but accurate data on yields, coupons, and pay/redemption dates can be difficult to find for DIY investors.

With the UNITED KINGDOM 0.25 31/01/2025 (LSE:TN25) gilt set to mature at the end of the month, a lot of cash is about to be deposited into customer accounts and could be looking for a new home.

To help investors understand what options they have, we have put together a table of the most-popular gilts on our platform (measured by assets held in the gilt), with the key data points for investors to help them understand what they are buying.

Investors can find a full list of gilts available on ii here: https://www.ii.co.uk/bonds

The UK’s Debt Management Officer also has a list of gilts in issue here: https://www.dmo.gov.uk/data/gilt-market/gilts-in-issue/

And the London Stock Exchange's website is a useful tool to find out when a gilt pays its coupons and matures.

Most-popular gilts by assets held

Source: interactive investor, Refinitv, London Stock Exchange, as of 17 January 2025. Past performance is not a guide to future performance.

Sam’s tips

UNITED KINGDOM 0.25 31/01/2025 (LSE:TN25) was such a popular gilt because of the 0.25% coupon, meaning that almost all the return came from capital appreciation as the gilt’s price ticked up to the £100 redemption value.

Gilts are free from capital gains tax, so for owners of this gilt held outside SIPPs and ISAs, the tax savings were significant.

Given that interest rates were held near zero from 2009 to 2021, there are lots of other low-coupon gilts trading in the market.

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I’d point investors to UNITED KINGDOM 0.125 31/01/2028 (LSE:TN28), which has a yield to maturity of a little over 4%. The low 0.125% coupon means the gilt trades at £88.90, so most of the return will come from capital uplift, rather than coupons (which are taxed as income). Maturing in three years, this gilt is a handy fixed-term savings tool that doesn’t require a long lock-up period.

For investors with less time to invest, UNITED KINGDOM 0.125 30/01/2026 (LSE:T26) is the obvious option. Maturing in a year’s time, the gilt, which costs £96.25, will slowly creep towards its £100 redemption value. This 3.9% return is nearly all the total return from holding the gilt to maturity.

Glossary

Gilt: name includes reference to maturity date and coupon. Gilts are also assigned a stock market ticker, such as TN28.

Yield to maturity: an estimation of the annual return of holding the gilt to maturity, assuming coupons are reinvested.

Coupon: the total annual income per £100 nominal gilt. For example, a 5% coupon indicates a £5 annual payment per every gilt held, split into two £2.50 payments. 

Coupon dates: gilts pay coupons twice a year, with the final coupon coming on the maturity date.

Maturity date: this is when the gilt matures, paying investors back their £100 redemption value per gilt.

Price: “clean” price of the gilt not accounting for accrued interest before the next coupon is paid. The dealing cost may therefore be greater.

Distribution yield: also known as the “running yield”, this is your annualised yield from the coupons you receive (but not taking into account any capital appreciation) based on the price you pay for the gilt.