The ladder designer is one calculator in two modes — income target solves the lump sum a target income needs, while lump sum solves the income a stated lump sum affords — so each mode is the other's question run backwards.
One calculator, two questions
The bond ladder designer builds the same kind of ladder whichever way a reader approaches it: one conventional gilt per year band, sized so each rung's redemption funds that year's draw. What changes between the modes is which number you supply and which the page works out. The income target mode takes a target income and solves the lump sum it requires. The lump sum mode takes the money you have and solves the annual income it affords. Each is a reverse of the other, so the two are not two different ladders but one calculation approached from opposite ends.
The income target mode
This is the default mode. You name the income the ladder should pay each year — the target inflation-adjusted income, which the page uplifts year by year at its inflation assumption — and a window of years. From that the page solves the lump sum the ladder needs to be bought, and lists the rungs that make it up. The headline output is a lump sum: the money the stated target income would take.
Because the target is inflation-adjusted, the income asked for rises across the window rather than staying flat. A reader who wants a level cash figure each year is asking a slightly different question from one who wants the same buying power each year, and the income field names the second.
The lump sum mode
In this mode you name the money you have to invest — the lump sum — plus the length of the ladder, an inflation assumption and a tax band. From those the page derives the affordable annual income draw, the mode's headline output, and shows the rungs the lump sum buys. Here the input is the money and the output is the income, which is the mirror image of the income target mode.
| Mode | What you supply | What the page solves | The headline figure |
| Income target | Target income, window | The lump sum required | The lump sum |
| Lump sum | Lump sum, length, inflation, tax | The annual income draw | The income it affords |
The same sizing underneath
Both modes build a redemption-funded ladder. Each rung buys the conventional gilt whose maturity lands in its year band and is sized so that rung's redemption principal funds that year's inflation-uplifted draw; the rung's coupon arrives as extra income rather than funding the draw. That single sizing rule is why the two modes reconcile: run the lump-sum sizing on the lump sum the income target mode produced, and you get the income draw you started with, to within the pennies the per-rung rounding leaves behind.
The tax field is the reader's marginal rate on the rungs' coupons while they run, not a tax on the redemption. A conventional gilt's redemption is a return of capital, so the draw it funds is not taxed as income, and a higher band does not enlarge the ladder — it changes what the coupons keep, not what the redemption delivers.
A worked reconciliation
The example below is illustrative, not a quote from any gilt. Suppose a reader asks the income target mode for £10,000 a year over a five-year ladder, at an inflation assumption of 3.0 per cent a year and a 20 per cent tax band. Suppose the page returns a lump sum of about £95,000 to buy that income. Enter £95,000 as the lump sum, keep the length at five years, the inflation at 3.0 per cent and the tax at 20 per cent, and the page returns an affordable draw of about £10,000 — the same figure, arrived at from the other direction.
| Input / output | Income target run | Lump sum run |
| Length | 5 years | 5 years |
| Inflation assumption | 3.0 per cent | 3.0 per cent |
| Tax band | 20 per cent | 20 per cent |
| Figure supplied | £10,000 a year | £95,000 lump sum |
| Figure solved | ≈ £95,000 lump sum | ≈ £10,000 a year |
The round figures are chosen to make the inverse relationship plain; the designer works on the priced gilts of the report the page is built from and rounds each rung to the nearest penny, so a reader's own numbers will not land on such clean results. What the illustration shows is only that each mode is the other run backwards, not a set of figures to rely on.
Which figure you are reading
The mode decides what the headline means. In income target mode the prominent number is a lump sum — what the income would cost to buy. In lump sum mode the prominent number is a per-year income draw — what the money affords. Reading the wrong one as the other is the commonest slip, so it helps to check which mode the page is in before quoting a figure. Both modes then list the same kind of rung table, the same per-year income projection and the same cash-flow charts, so the detail underneath reads the same whichever end you began at.
Background, not advice
This article explains how the two modes of the ladder designer answer inverse questions; it is general background on how the figures are put together, not investment, tax or legal advice for any reader's circumstances. A ladder does not remove interest-rate or market risk — it spreads a set of maturities across years — and the figures above are illustrative, each stating its inputs. The primary source for a real gilt's price, coupon or yield is the gilt's own record and the day's market data, and for a tax rate GOV.UK and HMRC. The conventional gilts list shows the gilts the rungs are drawn from, with the report date its prices carry.