A disposal of gilts is exempt from capital gains tax for individuals, so a holding's realised P&L appears without any CGT line behind it — neither a gain nor a loss on a gilt enters a capital gains computation, which is a different thing from saying the price cannot fall.
No CGT line for a gilt
When a gilt is sold or redeemed, any gain or loss on the disposal is outside capital gains tax for a UK-resident individual. Checked against GOV.UK and HMRC for the 2025/26 tax year, a gilt is an exempt asset for capital gains purposes, so a realised P&L on it produces no capital gains tax charge, uses none of the annual exempt amount, and does not appear on a capital gains computation at all.
That is why the portfolio a reader keeps shows the realised P&L on a closed gilt position with no CGT line beside it: there is nothing to compute. The figure is the cash the holding made or lost on its capital, stated on its own, because the tax on that capital does not arise.
What the exemption does, and does not, cover
The exemption covers the disposal itself. If a gilt is bought below par and repays £100 at maturity, the pull up to par is a capital gain, and it is exempt. If an index-linked gilt's repayment carries an inflation uplift, that uplift is capital too, and it is exempt in the same way. If the gilt is sold before maturity at a different price, the difference is capital, and it is exempt. Whatever shape the capital return takes, the disposal is outside capital gains tax for an individual.
It follows that a loss is treated the same way as a gain: because the disposal is exempt, neither enters the computation. A fall on a gilt is a real fall in cash terms, but it does not give a reader an allowable capital loss to set against gains elsewhere. The exemption removes the gain from tax; it also removes the loss from relief.
Realised P&L and IRR are cash measures
The two figures the portfolio puts on a holding are cash measures, and neither depends on capital gains tax. The realised P&L is the gain or loss on a position already sold — the difference between what it cost and what it returned. The IRR since inception is the internal rate of return on the actual cash flows in and out of the position, which turns the same gain into an annual rate. Both are computed from dated cash flows, and both are shown without a CGT deduction because a gilt has none to deduct.
| Item | Illustrative figure |
| Purchase clean price | £96.00 per £100 |
| Sale clean price | £99.50 per £100 |
| Nominal | £10,000 |
| Realised P&L (capital) | £350 gain |
| CGT line | None — exempt for individuals |
| Coupons received while held | £600, illustrative over the period |
The figures are illustrative and not a quote from any gilt. The £350 of realised P&L is the capital side, and it carries no capital gains tax. The internal rate of return would express the same cash gain — the £350 plus the coupons, against the £9,600 paid — as an annual rate over the holding period; because the capital tax is nil, no tax adjustment sits behind it. The coupons that ran alongside are the income side, taxed as savings income in the usual way.
Because the IRR is computed from dated cash flows, it shows the holding's cash return as an annual rate without needing a tax rate: there is no capital gains tax to fold in, and the coupon tax is a separate, income-side question. That makes the IRR a clean cash measure of what the position produced, distinct from the net redemption yield, which is a tax-aware yield built on the income.
Why the exemption is not a guarantee
The sound of "exempt from capital gains tax" can suggest a gilt cannot lose money, and it does not mean that. The exemption is about the tax treatment of a disposal; it says nothing about the price. A gilt sold before maturity returns whatever its market price is, which can be above or below what was paid. The £350 gain in the illustration could as easily be a loss if the price had moved the other way, and that loss would be exempt in the same sense — outside the tax computation — while still being a loss of cash.
The honest reading is that a gilt's capital is free of capital gains tax but not free of market risk. A reader who holds to maturity knows the £100 of nominal that will be repaid; a reader who sells on the way does not, and the exemption does not change which of those positions they are in.
Where the figure is shown
The portfolio page shows the realised P&L on positions already sold and the IRR since inception alongside it, which is the capital record of a holding with no capital gains tax line behind it. The post-tax yield page handles the other side — the income tax on the coupons that the disposal does not touch — so the two pages together show what a holding made on its capital and what its income kept after tax.
Keeping the two apart stops a reader from looking for a capital gains figure that will never appear. For a gilt, the only tax in the picture is on the coupon, and the only capital figure is the price the market pays when the holding is sold.
Background, not advice
This article explains why a gilt's realised P&L carries no capital gains tax line; it is general background, not investment, tax or legal advice for any reader's circumstances, and it is not a substitute for professional tax advice. The exemption is stated for the 2025/26 UK tax year and comes from GOV.UK and HMRC; the figures above are illustrative and state their inputs. GOV.UK, HMRC and the Debt Management Office are the primary sources for a real rule, price or coupon.