Are UK Gilts Exempt from Capital Gains Tax?

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Yes. Sell a gilt at a profit and there’s no Capital Gains Tax to pay, the exemption is unlimited, and it doesn’t consume any of your annual exempt amount. The rule has a second half that sits in a different section of the Act, which is why it travels less well: a loss on a gilt isn’t an allowable loss, so you can’t set it against a gain on anything else.

Everything below is about individuals and trustees. Companies don’t hold gilts inside CGT at all — they’re taxed under the loan relationships rules — and anyone dealing in gilts as a trade is on income account, where the exemption never comes up.

No tax on the gain, no relief for the loss

Section 115(1) of the Taxation of Chargeable Gains Act 1992 does it in one clause: a gain accruing on the disposal of “gilt-edged securities or qualifying corporate bonds” is not a chargeable gain. Nothing reaches SA108.

The loss side isn’t in section 115. It’s in section 16(2), which says the provisions that distinguish chargeable gains from non-chargeable ones apply equally to distinguish allowable losses from non-allowable ones. Exempt the gain and you have disallowed the loss, automatically and without anyone having to say so.

Take a different trade from the one below: you buy £50,000 nominal at 88.50 and sell at 82.00. That £3,250 is gone. It won’t shelter a gain on your shares and there’s nothing to carry forward.

Which is the practical shape of the thing. The exemption pays off when you hold to redemption, where par is a known number on a known date, and gives you nothing at all if you have to sell into a falling market.

Worked example: a low-coupon gilt

Low-coupon gilts trading below par are popular with higher and additional rate taxpayers for exactly this reason. Nearly all of the return is the exempt pull to par, and almost none of it is taxable coupon.

Take 0 1/8% Treasury Gilt 2028 (ISIN GB00BMBL1G81, in our registry here), which redeems on 31 January 2028. Suppose you buy £50,000 nominal at 88.50 — an illustrative price, not a quote; the real one moves every day.

Cash flowAmountTax treatment
Purchase, February 2026 — £50,000 nominal at 88.50£44,250Cost. Nothing to report
Coupon, twice a year£31.25 × 2 = £62.50 a yearSavings income
Redemption at par, 31 January 2028£50,000Not a chargeable disposal (s115)
Capital return£5,750£0 CGT, nothing on SA108

The £5,750 arrives untaxed. To keep the same £5,750 after tax, a higher rate taxpayer would need £9,583 of gross interest and an additional rate taxpayer £10,455. On the same £44,250 over the same two years, that is roughly 10.3% and 11.2% a year. No deposit account pays that, which is the point: the gilt doesn’t have to.

Hold to redemption and the coupon is the only figure on your return. £62.50 a year sits inside the £500 Personal Savings Allowance of a higher rate taxpayer, and well inside the £1,000 one of a basic rate taxpayer. An additional rate taxpayer has no PSA, so the whole £62.50 is taxable — £28 of tax a year.

Index-linked gilts work the same way. The RPI uplift on the principal is part of the redemption proceeds, so it rides on the same exemption; only the uplifted coupon is income. RPI is being aligned with CPIH methodology from February 2030, which changes the size of the uplift and not its tax treatment.

What you still pay tax on

The coupon. Gilt interest is savings income and it is paid gross. It gets the Personal Savings Allowance and the savings rates, and because nothing was withheld, nothing has been settled on your behalf.

Accrued interest, if you sell between coupon dates. Part of your sale price is interest the buyer is compensating you for. The Accrued Income Scheme (ITA 2007, Part 12) pulls that out of the otherwise exempt proceeds and taxes it as income. It only bites above a threshold: the scheme is switched off if the total nominal value of all your securities never tops £5,000 at any point in the tax year or the one before. Above that, accrued income profits go in box 3 on page Ai 1 of SA101.

The £50,000 nominal above is ten times that threshold. So selling mid-coupon puts a figure on your return, on a holding whose capital gain is entirely exempt.

Things that look like gilts and aren’t

  • Qualifying corporate bonds — exempt too, under the same subsection. A QCB is broadly a sterling, non-convertible corporate bond (TCGA 1992 s117). A convertible or foreign-currency bond isn’t a QCB, and is taxed like any other asset.
  • US Treasuries, Bunds, JGBs — not gilts, so not exempt. The gain is chargeable and computed in sterling, which means the exchange rate move between purchase and sale is part of it whether or not you ever converted the currency.
  • Gilt strips — under ITTOIA 2005 s445 you’re treated as transferring the strip at market value on 5 April every year and immediately reacquiring it. Tax can fall due on a strip you never sold, as income rather than as a gain.
  • Gilt futures and options — derivatives, not the underlying security, and they follow the ordinary CGT rules for options.

How to tell whether a bond is a gilt

“Gilt-edged security” is defined by enumeration rather than description. Schedule 9 to TCGA 1992 names the older stocks, and everything issued since is added by Treasury Order, which HMRC publishes as a running list of stocks and bonds charged on the National Loans Fund. That list gained 11 entries on 30 July 2026, 14 in May 2025 and 8 across 2023.

Note which document does the work. The Treasury Order confers the exemption; HMRC’s list catches up afterwards. A newly issued gilt is exempt from the date of its Order whether or not the published list mentions it yet.

Matching is by ISIN, because nothing else holds: the GB00B prefix sits on gilts, UK corporate bonds and UK equities alike. Our calculator checks every disposal against a registry of 122 gilt ISINs built from the Debt Management Office’s own D1A feed and snapshotted back to 2022, so historical disposals resolve too.

That registry is published. The UK Gilt Registry lists every ISIN we recognise, split into gilts currently in issue and those redeemed since 2022, each with its instrument name, conventional or index-linked type, maturity bracket and exact redemption date. No sign-in and nothing to upload — if you want to know whether the thing you sold was CGT-exempt, search the page for its ISIN.

When a GB-prefixed bond isn’t in the registry, the calculator taxes it as a normal disposal and raises a warning rather than guessing. That direction is deliberate: an unrecognised gilt makes you overpay, which you can spot and correct, whereas a wrong guess the other way would silently underpay. If the warning fires, check the ISIN against the DMO list before you file.

Upload your broker CSV and gilt disposals are excluded from the SA108 figures automatically, with a note naming the holding that was excluded and why. The gilts documentation covers detection in more detail.

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