Evaluate a bond: coupon income, current yield, yield to maturity (YTM) and after-tax yield. UK gilts are free of Capital Gains Tax, and coupons are tax-free inside an ISA — pick your band to see the net YTM.
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£
£
%
yr
Gilt capital gains are CGT-free; the band applies to the coupon only. Hold in an ISA for tax-free coupons.
=Net yield (YTM)
4.30%
Current yield4.43%
Gross YTM5.17%
Annual coupon£4.25
Net coupon£3.40
Capital gain£4.00
Net yield (YTM)4.30%
Net yieldafter tax
4.30%
Net yield (YTM): 4.30% · Gross YTM: 5.17% · Current yield: 4.43%
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Last updated: 12 July 2026. UK gilts (conventional and index-linked) are exempt from Capital Gains Tax (TCGA 1992 s.115), so any pull-to-par gain is tax-free; coupon interest is taxed at your marginal rate but can be sheltered by the Personal Savings Allowance or held tax-free in an ISA. Sources: GOV.UK, UK DMO. Not investment advice.
⚖︎ Results are for informational purposes and do not constitute tax advice. For specific situations, consult a licensed accountant or the relevant tax authority.
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iHow it is calculated
Current yield = annual coupon ÷ price. Yield to maturity (YTM) is the rate that makes the price equal the present value of all coupons plus the face value at maturity — solved iteratively. Choose the coupon frequency (gilts pay semi-annually) and your tax treatment: ISA (0%) or your Income Tax band (20/40/45%) on the coupon. Because gilts are CGT-exempt, any capital gain to par is not taxed.
current yield = annual coupon ÷ price · YTM: rate where price = Σ coupons + face, discounted
A gilt with £100 face, a 4.25% coupon paid semi-annually, bought at £96 with 5 years left: annual coupon £4.25, current yield 4.43%, and YTM ≈ 5.2% (the sub-par price adds a tax-free gain to par). For a basic-rate holder, coupon tax is 20% but the £4 capital gain is CGT-free, so the net YTM stays well above the current yield.
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?Frequently asked questions
Are UK gilts tax-free?
Partly. Gilts (conventional and index-linked) are exempt from Capital Gains Tax, so any gain when a sub-par bond pulls to par at maturity is tax-free. The coupon interest is taxable at your marginal rate, but the Personal Savings Allowance (£1,000/£500/£0) may cover it, and gilts held in an ISA or pension are fully tax-free.
What is yield to maturity (YTM)?
YTM is the annualised return if you hold the bond to maturity and reinvest coupons at the same rate. It's the discount rate that makes the present value of all future coupons plus the face value equal today's price.
How is YTM different from current yield?
Current yield = annual coupon ÷ price and ignores any capital gain or loss and the time to maturity. YTM also captures the difference between price and face value and the maturity, so it's the fuller measure of return.
How is the YTM calculated here?
By bisection: the tool searches for the rate that makes the discounted cash flows equal the price. This is robust even at very high yields and more accurate than the closed-form approximation.
What is the Personal Savings Allowance for gilts?
Coupon interest counts as savings income. Basic-rate taxpayers get £1,000 tax-free, higher-rate £500, additional-rate £0. This tool applies a flat band to the coupon; if your coupon fits inside the allowance, your effective coupon tax may be lower.
Are index-linked gilts covered?
This version models fixed-coupon bonds. Index-linked gilts adjust both coupon and principal by RPI, which needs a separate real-yield-plus-inflation model — treat this tool's output as the nominal, fixed-coupon case.
What's the difference between clean and dirty price?
The quoted (clean) price excludes interest accrued since the last coupon; the price you actually pay (dirty) = clean price + accrued interest. This calculator uses the price you enter with whole coupon periods; for mid-coupon trades, add accrued interest separately.
Annual or semi-annual — which frequency?
Match how often the bond pays. UK gilts pay semi-annually; some bonds pay annually. Frequency slightly changes the YTM because coupons are discounted over shorter periods.
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