Gilts are bonds issued by the UK government to raise money. They are generally considered very low-risk investments and have a special status for Capital Gains Tax.

Gilts, or gilt-edged securities, are the UK equivalent of US Treasury bonds. When you buy a gilt, you are essentially lending money to the government in return for regular interest payments and the promise that your original investment will be repaid on a set future date.

Tax Treatment

Gilts have a very favourable tax treatment which makes them attractive to investors, particularly those concerned about tax.

Capital Gains Tax (CGT): Any profit you make from selling a gilt is completely exempt from Capital Gains Tax. This is their main tax advantage.
Income Tax: The regular interest payments you receive from holding gilts (known as 'coupons') are taxable as savings income. This income is subject to your Personal Savings Allowance and will be taxed at your marginal rate of income tax if it exceeds your allowance.

This CGT exemption makes gilts a useful tool for managing a portfolio's overall tax liability.

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