A reference to the three yields GiltIQ shows for a gilt — gross, DMO and net redemption — and the rules for comparing them without mixing conventions.
Three columns, one gilt
The conventional gilts list shows a gilt's yield three times. The gross yield and the net redemption yield compound once a year; the DMO yield follows the UK Debt Management Office's market convention, with coupons twice a year and days counted on the actual calendar. The net figure is the gross figure with income tax on the coupons deducted first. Three columns, one gilt, and three slightly different questions answered.
This page is a reference for moving between them. It does not add a fourth convention and it does not restate the calculation: the figures come from the daily report, and what is set out here is what each column assumes and how to compare rows without changing the basis halfway.
The conventions at a glance
| Column | Compounding | Tax on coupons | Day count | Compare it with |
| Gross yield | Once a year | Ignored | Calendar | Savings rates and annual returns |
| DMO yield | Twice a year | Ignored | Actual days | Market screens and provider reference yields |
| Net redemption yield | Once a year | Deducted | Calendar | After-tax returns at a stated rate |
The gross yield is the annual figure the site treats as its headline. The DMO yield is the same quantity on the convention the market quotes, which is why the two sit a few basis points apart rather than agreeing to the last decimal. The net redemption yield re-solves the annual figure on coupons net of income tax, so it shares the gross column's compounding and differs from it in tax. Read across a row, the three figures are ordered by construction: the annual figure above the semi-annual one, and both above the net figure.
One gilt across all three
The table sets one illustrative gilt out across the three columns. The inputs are an annual coupon of 4.00, a clean price of 98.50, eight years to maturity and a 20% income tax rate on the coupons; the figures follow from those inputs and none of them is a quote from any gilt.
| Column | Illustrative figure | What moved it |
| Gross yield | About 4.27% | Annual compounding of a 4.22% semi-annual yield |
| DMO yield | About 4.22% | The semi-annual market convention |
| Net redemption yield | About 3.45% | Coupons taxed at 20%, then compounded annually |
Read in order, the three figures tell a short story. The DMO figure is the market convention; the gross figure is the same yield compounded once a year, so it sits a little above it; and the net figure is the gross figure with tax taken out of the coupons, so it sits well below both. The order of the three is a property of the conventions rather than of this gilt.
The size of the annual-versus-semi-annual gap grows with the square of the yield, so it is a few basis points at ordinary levels. The tax gap grows with the coupon rate and is far larger, which is why the two gaps are never a single correction.
Rules for comparing rows
A comparison is only as good as the basis it is made on. Moving between columns partway down a list is the easiest mistake to make and the hardest to notice, because every individual figure looks reasonable. The rules below keep a comparison on one basis.
- Pick one column and read every gilt on it; do not compare one gilt's gross yield with another's DMO yield.
- When the tax rate changes between two rows, the net figures are not comparable until the same rate is applied to both — the post-tax yield page holds the rate fixed across a column for that reason.
- Compare the DMO column with an external reference yield and the gross column with an annual return, because those are the conventions each is stated on.
- Treat a gap between the gross and net columns as a statement about tax and a gap between gross and DMO as a statement about compounding, never the other way round.
A note on the net figure's base
The net redemption yield taxes the coupon income rather than the whole return, because the repayment of a gilt at maturity is a capital amount, and gains on UK gilts are exempt from capital gains tax for individuals under the rules published by GOV.UK. The site's calculation taxes the coupon less the accrued interest paid for it, so a buyer who hands over accrued interest does not pay income tax twice on that slice. The report records the calculation version that produced each stored figure, which is what lets a reader tell one convention from another after the fact — including the change that put the accrued interest paid for the coupon outside the taxable base. A reader comparing a stored figure with a freshly computed one should check that version before treating a difference as an error.
The consequence for comparison is worth stating plainly: a low-coupon gilt bought at a discount carries more of its return as exempt capital and less as taxable coupon, so its net yield sits closer to its gross yield than a high-coupon gilt's does at the same gross level. Two gilts with similar gross yields can therefore separate on the net column, and that separation is a statement about tax rather than about the market's view of the gilts.
Background, not advice
This page is a reference to the yield conventions GiltIQ displays; it is general background, not investment, tax or legal advice for any reader's circumstances. The tax treatment described is the general position for a UK individual rather than advice on any reader's position, and every figure above is illustrative with its inputs stated. The Debt Management Office, GOV.UK and the day's market data are the primary sources for a real yield, convention or tax rule.