The net redemption yield is the gross yield with income tax on the coupons taken out, so the gap between the two columns depends on the coupon and the price rather than on the gilt's quality.
One difference: tax on the coupons
On the conventional gilts list the gross yield and the net redemption yield sit in separate columns and differ by the income tax that would be paid on the coupons. They are on the same compounding convention — once a year — so the only thing between them is tax. Gross ignores it, net deducts it from each coupon and solves the yield again on what is left.
That makes the two columns answers to different questions. Gross answers what the gilt returns before tax. Net answers what it returns to a taxpayer at a stated rate. Neither is the more honest figure; they are the same gilt under two assumptions, and a reader needs to know which assumption a quoted figure carries before comparing it with anything else.
What the net figure taxes
The net redemption yield taxes the coupon income, not the whole return. The repayment of a gilt at maturity is a capital amount, and under the rules published by GOV.UK, gains on UK gilts are exempt from capital gains tax for individuals. A gilt bought below par and held to redemption therefore delivers its pull to par without a capital gains charge, while the coupons it pays are taxed as savings income in the ordinary way.
The site's net calculation also excludes the accrued interest paid for the coupon from the taxable base. A buyer hands over accrued interest as part of the price and receives it back inside the next coupon, so taxing the whole coupon would tax that slice twice. The report records the calculation version that produced each stored figure, which is how a reader can tell one convention from another after the fact.
The same gilt in two columns
The illustration takes one gilt with a 4.00% coupon quoted at 98.50 clean, eight years to maturity, and a 20% income tax rate on the coupons. The figures are illustrative and not a quote from any gilt; every input is stated so the gap can be checked.
| Measure | Illustrative figure | What it reflects |
| Clean price | 98.50 | The price paid |
| Annual coupon | 4.00 per £100 | The gilt's terms |
| Gross redemption yield | About 4.27% | Coupons and redemption before tax |
| Net redemption yield | About 3.45% | Coupons after 20% tax, redemption untaxed |
| Gap | About 82 basis points | The tax on the coupon, spread over the price |
The size of the gap has a simple check. The coupon is £4.00 a year and the tax on it is 20%, or £0.80; against a price of about £98.50 that is roughly 0.81% of the price, a little under the 82 basis points the two columns differ by. The full calculation is not quite that shortcut, because the tax is applied inside the yield rather than subtracted from it at the end, but the approximation is close enough to explain the magnitude.
Why two gilts with the same gross yield differ net
The gap depends on how much of the return arrives as taxable coupon rather than as exempt capital. A low-coupon gilt bought at a discount delivers much of its return as the pull up to par, which is untaxed, so its net yield stays close to its gross yield. A high-coupon gilt bought at a premium delivers most of its return as coupon and gives some of it back in the fall to par, so its net yield falls much further. The table shows two five-year gilts on the same gross yield.
| Measure | Low-coupon gilt | High-coupon gilt |
| Annual coupon | 2.00 per £100 | 6.00 per £100 |
| Clean price | About 91.02 | About 108.98 |
| Gross redemption yield | About 4.04% | About 4.04% |
| Net yield at 20% tax | About 3.61% | About 2.88% |
| Gap between the columns | About 43 basis points | About 116 basis points |
Same gross yield, a gap between the net figures of more than seventy basis points, and none of it is about the credit of the two gilts — both are obligations of the UK government. The difference is the shape of the return and how the tax system treats each part. That is why a comparison done on gross yields alone can rank two gilts one way and a comparison done on net yields rank them the other.
The net column is only as meaningful as the tax rate behind it. At a different rate the gap changes, and at a zero rate it disappears; a net figure quoted without its rate is not comparable with another net figure.
Where the tax rate comes from
The post-tax yield page shows the net figures at a range of constant tax rates and keeps the rate fixed down a column, so gilts can be compared at one rate rather than at whichever rate happened to be applied. It also carries a blended set of columns for the savings-income rate change announced for April 2027, because a single constant rate cannot model a year that spans the change.
- A net yield quoted without a tax rate is not a comparison, because the gap moves with the rate.
- The tax on coupon income is savings income tax in the ordinary way, subject to the allowances a UK individual may have.
- The redemption gain is exempt from capital gains tax for individuals, so it is not netted down anywhere in the site's figures.
- The rate that applies to a reader depends on their own circumstances, which is why the site shows a range rather than one number.
Background, not advice
This article explains the difference between a gilt's gross and net redemption yield; 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. GOV.UK, the Debt Management Office and the day's market data are the primary sources for a real tax rule, yield or price.