A gilt's nominal value is the £100 per unit it repays at maturity, while its market value is what the price you pay makes it worth — and the two are rarely the same number.
Nominal value is the promise, not the price
A gilt carries two different numbers that are easy to confuse. Its nominal value is fixed when it is issued: each unit stands for £100 of nominal, and that is the amount the government repays for every £100 held when the gilt matures. Its market value is what that same £100 of nominal changes hands for in the market. Because a gilt trades throughout its life, its market value is set by the price rather than by anything decided at issue. A gilt quoted at 98.50 has a market value of £98.50 per £100 nominal; one quoted at 102.00 is worth £102.00. The £100 promise does not move; the price around it does.
Keeping the two apart matters because almost everything else a reader meets on a gilt list — the coupon, the yield, the amount you pay — is expressed per £100 of nominal, while the cash that actually changes hands depends on the price. The nominal value is the reference point; the market value is what the market will pay for it on a given day.
Why market value separates from nominal value
The gap between the two exists because a gilt's coupon is fixed at issue while the return the market wants is not. If interest rates rise after issue, a gilt paying an older, lower coupon looks less attractive next to newer debt, so its price falls below £100 and its market value drops under its nominal value. If rates fall, the older, higher coupon becomes worth more and the price rises above £100. The gilt still repays exactly £100 nominal at maturity; only the price the market is willing to pay for that £100 moves along the way.
A gilt bought below its nominal value is said to be bought at a discount, and one bought above it at a premium. Neither word is a judgement about the gilt: they describe where the market price sits relative to the £100 that will come back at maturity, and both are ordinary outcomes of a fixed coupon meeting a moving market.
| Measure | What it means | Does it change? |
| Nominal value | £100 per unit, repaid at maturity | No — fixed at issue |
| Market value | The price paid per £100 nominal, times the nominal held | Yes — set by the market |
| Clean price | The market price before the interest built up since the last coupon | Yes — quoted by the market |
| Income per £100 | The annual coupon paid on £100 of face value | No — fixed by the gilt's terms |
Clean price and accrued interest make the dirty price
A quoted price is the clean price: the value of the gilt itself, before the interest that has built up since the last coupon payment. The seller has held the gilt for part of the coupon period and is owed that slice of interest, so the buyer hands it over as part of the trade. That built-up interest is accrued interest, and the clean price plus the accrued interest is the dirty price — the cash a buyer actually pays for £100 nominal.
The dirty price is the clean price plus the accrued interest. It is the amount of cash that changes hands, per £100 nominal, on the day of the trade.
Working out the cost of £100 nominal
On the conventional gilts list each gilt carries its clean price, its accrued interest and its income per £100. Putting the first two together gives the cash cost of holding £100 nominal; the third is the interest it pays each year. The arithmetic below is illustrative and not a quote from any gilt: it assumes a clean price of 98.50 and accrued interest of 1.23 per £100 nominal.
| Component | Per £100 nominal |
| Clean price | £98.50 |
| Accrued interest | £1.23 |
| Dirty price (cash paid) | £99.73 |
| Income per £100 (annual coupon) | £4.00, illustrative |
On £1,000 nominal — ten units of £100 — the buyer pays ten times £99.73, or £997.30. Of that, £985.00 is the clean price and £12.30 is the accrued interest, kept apart because the accrued slice is a refund of interest the seller had already earned. If the gilt matures at par it returns the full £1,000, and on the illustration above it pays £40.00 a year in coupon. None of these are current figures; they show how the page's columns combine to answer the question of what a slice of a gilt costs.
What the cost figure does and does not tell you
The gilt's own page, opened from the list, carries the per-£100 cash-flow schedule, which lists every future coupon and the final repayment, so the cost of £100 nominal can be set against the cash it returns. What the cost figure does not tell you on its own is the return. That depends on the price paid, the coupons received over the holding period and the £100 repaid at maturity, which is what the yield columns express. Two gilts with the same nominal value can cost very different amounts and return very different yields.
It is worth remembering that the market value is a snapshot. The price a gilt shows on any given day is where the market last traded it, and it will differ from the £100 nominal until the gilt approaches maturity. Reading the clean, accrued and dirty figures together — rather than the nominal value alone — is what turns a quoted price into the actual cost of a holding.
General background, not advice
This is general background on how a gilt's value is put together, not investment, tax or legal advice for any reader's circumstances. A gilt's price can move before maturity, so the market value at any moment is not the amount that will come back. Any figure here is illustrative, and the primary source for a real price, coupon or repayment is the gilt's own record and the day's market data.