Holding a gilt means owning a fixed stream of coupon payments and a £100 nominal repayment at maturity, and what that holding returns depends on the price paid for the stream.
A gilt holding is a stream of payments
A gilt is a loan to the UK government, and holding one means owning the right to a fixed stream of cash. That stream has two parts: the coupon, an interest payment made twice a year until the gilt matures, and the repayment of £100 of nominal for every £100 held on the maturity date. Nothing about the stream changes once the gilt is issued — the amount and timing of every payment are fixed by the gilt's terms. What does change is the price the market will pay to own that stream, and therefore the return a new buyer gets from it.
It helps to keep three questions apart. What does the holding pay each year? What does it cost to buy? And what does the combination of the two imply about the return? The conventional gilts list answers all three for each gilt, and this guide walks through them in order.
The coupon is the income the gilt pays
The coupon is the fixed interest paid each year, per £100 of nominal value. A gilt with a 4% coupon pays £4.00 a year on every £100 of nominal, usually split into two payments six months apart. The coupon does not rise or fall with the market; it is set when the gilt is issued and stays there for the gilt's life. That is why it is described as fixed cash.
Because the coupon is quoted per £100 of nominal, a holding's actual income is the coupon scaled to the size of the holding. Someone holding £5,000 nominal of a 4% gilt receives £200 a year, in two instalments of £100. The income per £100 column on the gilt list shows the annual figure directly, so a holding's income is the income per £100 multiplied by the number of £100 units owned.
The price you pay is the dirty price
Income is only half of what a holding is. The other half is what it costs to buy. A gilt is quoted at its clean price — the value of the gilt itself, before the interest that has built up since the last coupon. But a buyer also pays accrued interest, the slice of the next coupon the seller has earned while holding the gilt. Clean price plus accrued interest is the dirty price, the actual cash paid per £100 nominal.
The dirty price is what a buyer actually pays for £100 nominal. It is the clean price plus the accrued interest, and the two are shown separately so the income and the capital cost can be read apart.
What the holding returns
The return on a gilt is not the coupon alone. A gilt bought below £100 pays its coupon and then repays more than was paid, so the return is higher than the coupon; one bought above £100 repays less than was paid, so the return is lower. The figure that folds all of this together — the coupons received, the price paid and the £100 repaid — is the yield, which is the annualised return a holder would earn by keeping the gilt to maturity.
Two gilts can have the same coupon and still return different amounts, because the price paid for each is different. A low-coupon gilt bought at a discount and a high-coupon gilt bought at a premium can, in principle, produce the same yield if the market has priced them to be equivalent. That is why the yield, not the coupon, is the figure that compares gilts on like terms.
Reading a holding on the gilt list
For any gilt, the page shows the coupon and the income per £100 beside the clean price and the dirty price, so the annual income a holding pays can be read next to what it costs. The NPV column takes the next step: it discounts each future flow back at the gilt's gross redemption yield, so the total of the discounted flows equals the dirty price. In other words, NPV is the same stream of payments expressed at present value, and it is a check that the income and the price agree with the yield.
Two holdings of the same gilt bought at different prices will show the same coupon and the same income per £100 but different yields, because the return folds in the price. That is the practical reason the list puts income and yield side by side: the first is what the holding pays in pounds, the second is what those pounds amount to as a return. Reading them together is how one holding can be set against another rather than judged on its own.
| What the holding gives you | Where it shows | How it behaves |
| Coupon and income per £100 | The gilt list | Fixed by the gilt's terms |
| Clean price | The gilt list | Moves with the market |
| Dirty price (cash paid) | Clean price plus accrued interest | Moves with the market and the day |
| NPV | The gilt list | Discounts each flow to present value |
The gilt's own page, opened from the list, carries the per-£100 cash-flow schedule, which lists every coupon and the final repayment for that gilt, so the income and the repayment can be seen as a schedule rather than as single figures. Reading the schedule alongside the coupon, the dirty price and the NPV total turns a set of columns into a picture of what the holding pays and what it costs.
Background, not advice
This guide explains how a gilt's income and return are put together; it is general background, not investment, tax or legal advice for any reader's circumstances. Every figure an illustration would use depends on the day's price, and a gilt's price can move before maturity, so a holding's return is not fixed in advance. The gilt's own terms and the market data are the primary source for real coupons, prices and repayments.