A gilt carries a clean price, an accrued interest figure and a dirty price, and the short answers to the questions readers ask about the three are collected here.
Why a gilt has three prices
A conventional gilt pays its coupon twice a year, but it trades every business day. Between two payments the interest owed on the gilt grows steadily, and the market separates the gilt's own value from that running interest rather than folding the two into one number. The result is three figures on every row of the conventional gilts list: the clean price, the accrued interest, and the dirty price that adds them together.
| Figure | What it measures | Per £100 nominal, illustrative |
| Clean price | The gilt itself, before interest built up since the last coupon | £98.50 |
| Accrued interest | Interest built up from the last coupon to the settlement date | £1.23 |
| Dirty price | The cash a buyer pays: clean price plus accrued interest | £99.73 |
The figures in the table are illustrative and not a quote from any gilt. They exist to show how the three relate: the first two add up to the third, and the site's own rows carry the report's figures for every gilt in issue.
The three definitions
What is the clean price?
The clean price is the value of the gilt itself, before the interest that has built up since the last coupon. It is the figure a market screen or a newspaper quotes, and the one a reader usually means by the price of a gilt. Because it excludes the running interest, it is the figure that compares two gilts directly, whatever their coupon dates.
What is the dirty price?
The dirty price is the clean price plus the accrued interest, and it is the cash that changes hands per £100 nominal. A buyer pays it because the seller has held the gilt through part of the coupon period and is owed that slice of the next payment. The dirty price is not a different valuation of the gilt; it is the valuation plus the interest in transit.
Why is it called dirty?
Dirty is shorthand for mixed in with something else. The dirty price has the running interest included, so it is not a clean comparison between one gilt and another. The word is not a judgement about the price or about the trade; it marks which of the two comparisons the figure supports.
The questions about accrued interest
Is accrued interest an extra charge?
No. Accrued interest is interest the seller has already earned by holding the gilt, and the buyer reimburses it. It comes back as part of the next coupon, because the buyer receives the whole payment even though they held the gilt for only part of the period. It is a transfer between the two parties, not a fee to anyone else.
Why does the difference change from day to day?
Accrued interest grows with the number of days since the last coupon, so it rises daily and then resets when the coupon is paid. Two gilts with the same annual coupon can carry different accrued interest on the same day, because their coupon periods need not fall on the same dates. The day count, not the coupon alone, is what moves the figure.
Can accrued interest be negative?
Yes, in the short window before a coupon when the gilt has gone ex-dividend. A buyer in that window does not receive the next coupon, so the running interest reverses sign and the dirty price sits below the clean price. The window and the sign are covered in the article on ex-dividend and rebate interest rather than here, because the mechanism is different from the ordinary case.
Does accrued interest depend on the settlement date?
It does. Accrued interest is measured to the settlement date rather than to the day the order was placed, so a trade settling a day or two later carries a day or two more of it. The site's list figures assume a T+1 settlement, and the page footer says so; a slower settlement route will move the accrued figure slightly.
Reading the row on the list
On the conventional gilts list the clean price carries a day-over-day change beside it, the accrued interest carries the number of days it covers, and the dirty price carries its own change. The days count is the one readers miss: it explains why two rows with similar accrued figures can be at different points in their coupon periods, and it is the cell that moves every business day.
- Use the clean price to compare gilts, because it leaves out the accident of how long it has been since each one paid.
- Use the dirty price to work out what a purchase costs, because it is the figure the cash follows.
- Use the accrued interest and its day count to check a contract note, since that is the part that differs between a quote and a settlement.
- Treat a large accrued figure as a timing fact rather than a hidden cost: the same money returns in the next coupon.
A reader who wants the history of the clean price rather than the current split can open a gilt's own page from the list, which charts the stored closes and yields over a chosen window. The history holds the clean price, because that is the figure comparable across dates; the accrued interest is a running total that resets twice a year and would obscure the price series rather than illuminate it.
Why a contract note can differ from the list
A contract note is struck at a particular settlement date and often at a particular dealer's price, while the list records the report's close for a standard settlement. The clean price can differ by the width of a dealer's spread, and the accrued interest by a day or two of accrual. Neither difference is an error; they are two measurements of the same gilt taken at slightly different points in time and place.
The check that catches a genuine mistake is internal to the note: the clean price and the accrued interest should add up to the dirty price, and the dirty price times the nominal held should give the cash before fees. When those three do not reconcile, the place to look is the number of accrued days rather than the price itself.
Background, not advice
This article explains what the three prices on a gilt row mean; it is general background, not investment, tax or legal advice for any reader's circumstances. Every figure quoted here is illustrative and states its inputs, and prices move, so a figure read on one day will differ from the next. The gilt's own record and the day's market data are the primary sources for a real clean price, accrued amount or dirty price.