Gilts are loans to the UK government. You lend money for a set period, the government pays you interest twice a year, and you get your money back on a fixed date. Because the borrower is the state, gilts are seen as one of the safest investments in the UK.
Interest rates on savings have made gilts popular again with ordinary savers. But how do you actually buy one? There are three main routes, and they suit different people. This guide explains each route, what it costs, and how gilts are taxed.
First, the two types of gilt
Conventional gilts pay a fixed interest payment, called the coupon, every six months. At the end of the term — the maturity date — you receive the gilt’s face value, usually £100 per unit. If the coupon is 4.5% and you hold £1,000 of the gilt, you receive £45 a year in interest, in two payments of £22.50.
Index-linked gilts work differently. Both the coupon and the final repayment rise with inflation, measured by the Retail Prices Index. They protect the real value of your money, but the payments start lower and the calculations are more complex.
One thing confuses new buyers. The price of a gilt moves. If you pay £95 for a gilt with a face value of £100, your return is better than the coupon alone suggests, because you also gain £5 at maturity. If you pay £105, the opposite is true. The figure that combines both is called the yield to maturity. Always look at that, not just the coupon.
Route 1: an investment platform (the route most people use)
The simplest way to buy gilts is through an investment platform or stockbroker. You open an account, search for the gilt by name or by its code, and buy it like a share. The gilt then sits in your account alongside any funds or shares you hold.
This route has three big advantages. You see a live price before you deal. You can sell quickly if your plans change. And you can hold gilts inside a Stocks and Shares ISA or a SIPP, which changes the tax picture completely — see below.
Costs are modest. Platforms typically charge a small dealing fee per trade, plus their usual account fee. Check both before you open an account, because the account fee matters more as your holding grows.
Route 2: the DMO Purchase and Sale Service
You can also buy directly from the government. The UK Debt Management Office (DMO) runs a Purchase and Sale Service for private investors. It is administered by Computershare, which keeps the official gilt register.
To use it, you first apply to join the DMO’s Approved Group of Investors. You then buy and sell by completing dealing forms. Your gilts are registered in your own name rather than held by a platform.
This route is slower and more paper-based. You cannot choose your price — the deal is done at the market price when your form is processed. The service charges commission on its published scale, so check the current charges on the DMO website before you use it. Most people now find a platform easier. But the direct route exists, and it avoids platform account fees.
The DMO also issues new gilts at regular auctions. Private investors can apply on a non-competitive basis, which means you accept the average price set by the auction. The minimum application at auction is £1,000 nominal.
Route 3: a gilt ETF or bond fund
If choosing individual gilts sounds like hard work, a gilt ETF holds a basket of them for you. Well-known examples track the whole UK government bond market and charge low annual fees — around 0.07% a year for the largest funds. You buy and sell the ETF through a platform, like any other fund.
The trade-off is control. With your own gilt, you know exactly when your money comes back. A fund has no maturity date, so its price keeps moving. For a fixed goal on a fixed date, an individual gilt is usually the cleaner tool.
How gilts are taxed
Tax is where gilts have a genuine edge, and it works in two parts.
- The coupon is income. Outside an ISA or SIPP, the interest counts as savings income and is taxed at your income tax rate, after your Personal Savings Allowance.
- The gain is not. Gilts are exempt from capital gains tax under section 115 of the Taxation of Chargeable Gains Act 1992. If you buy a low-coupon gilt below face value and hold it to maturity, the profit element is tax-free.
That second point is why higher-rate taxpayers often prefer low-coupon gilts to savings accounts. Inside an ISA or SIPP, both parts are sheltered anyway. Our guide to how blockchain is reshaping personal finance covers newer digital alternatives, but gilts remain the benchmark for low-risk lending.
The risk you must understand
Gilts are low risk, not no risk. If you sell before maturity, you get the market price on that day. Prices fall when interest rates rise, so you could get back less than you paid. If you hold to maturity, you know exactly what you will receive — but inflation can still reduce what that money buys. Gilts are also not covered by the Financial Services Compensation Scheme in the way bank deposits are; their safety comes from the government standing behind them.
Which route suits you?
- You want a known amount back on a known date: buy an individual gilt on a platform, ideally inside an ISA.
- You want the simplest hands-off option: choose a gilt ETF.
- You dislike platform fees and paperwork does not bother you: look at the DMO service.
Whichever route you pick, check the maturity date and the yield to maturity before you buy. Those two numbers tell you more than anything else on the page.
Information checked against DMO and GOV.UK sources in November 2026. Gilt prices and yields change daily. This article is general information, not investment advice.
