Home >

Bonds and gilts

Bonds and Gilts

investing in bonds and gilts with interactive investor

How bonds and gilts work

Bonds and gilts are typically low risk fixed income investments which can take pride of place in any portfolio. Corporate bonds are issued by corporations and gilts are bonds are issued specifically by the British government to borrow money.

There are different types of gilts but most will typically pay a fixed coupon biannually and mature on a set date in the future. Other options are Index-linked gilts which track the Retail Price Index (RPI) or you can buy undated gilts, where there is no fixed redemption date.


Bonds and gilts are normally issued at £100 each and pay back £100 on their redemption date, plus you’ll receive interest (the coupon) at a fixed rate each year until then. You can also trade them on the secondary market where the price will be typically dictated by market forces such as supply and demand as well as interest rates.

If you hold a bond until expiry it will be redeemed at its face value of £100 so a gain or loss on the principal holding will depend on whether you paid above or below £100 on the secondary market.

we offer bonds when new ones are issued. Visit our New Issues and IPOs hub to see what is currently available. 

tax advantages

All gilts and some corporate bonds are exempt from capital gains tax (CGT). However, unless your bonds are held in an ISA or other tax-free wrapper products, you will still be liable to pay income tax on any interest you earn.

risk warning
