Interest gets taxed.Gilt gains don’t.

A gilt gives you two types of return, taxed differently. The coupon, your fixed interest payment, is taxed as income. The potential capital gain, meaning the difference between what you paid and the nominal face value you get back at maturity, is exempt from Capital Gains Tax for UK individual investors, even beyond an ISA.

That means a low coupon gilt bought at a discount delivers a tax-efficient return well past your £20,000 ISA allowance. Because of the tax treatment, low coupon gilts could deliver a tax advantaged gain for investors within higher income tax brackets.

For businesses, both income and gains are taxed under standard corporation tax rules instead. This is not tax advice, and tax treatment depends on your personal circumstances.

Keep in mind that tax treatment depends on your personal circumstances and may change in future. Lightyear does not provide tax advice. Get professional advice if you're unsure how this applies to you.

On Lightyear, gilt prices are quoted per £1 of nominal value. As an example, a clean price of £0.92 means you pay £0.92 now for every £1 of face value you'll get back at maturity. Alternatively, a dirty price of £1.20 means you pay £1.20 now for every £1 or face value you'll get at maturity

With other brokers, you might see the same gilt quoted per £100 of nominal value instead (£92 rather than £0.92). The two prices are identical, just scaled differently.

The price reflects the gilt's current market value and moves hand in hand with market conditions.

A clean price means the bond's price excluding accrued interest and that's the one typically quoted for standard market comparisons. A dirty price is the total price you pay at purchase, which includes accrued interest that has built up since the last coupon payment.

Yes, gilts are available on Lightyear business accounts too for an order fee of £1.

While businesses don’t don't benefit from the Capital Gains Tax exemption as individual investors do (gains and income are taxed under standard corporation tax rules for businesses), gilts can be a useful asset to earn low-risk, fixed income timed to the company’s needs.

Remember to always only invest excess cash.