Lightyear has added UK government bonds, or gilts, to its investment platform, giving UK customers a low-cost way to buy individual gilts alongside shares, ETFs and money market funds.
The investing app has launched with 20 gilts, which can be bought, held and sold with no order fees or custody charges for individual investors. As gilts are denominated in sterling, there is also no foreign exchange fee when investing with GBP.
What are gilts?
Gilts are bonds issued by the UK government. Buying one effectively means lending money to the government in exchange for fixed interest payments, known as coupons, normally paid twice a year. At maturity, investors receive the gilt’s nominal or face value.
One attraction is their unusual tax treatment. Coupon payments are generally subject to income tax, but capital gains on gilts are exempt from Capital Gains Tax for individual investors.
This can make low-coupon gilts trading below their £1 nominal value particularly interesting for higher-rate taxpayers, as a greater proportion of the potential return comes from the tax-free difference between the purchase price and redemption value rather than taxable interest.
Tax treatment depends on individual circumstances and can change.
How to buy gilts on Lightyear
To buy gilts on Lightyear customers need the latest version of its app and can browse gilts by coupon or maturity date. Prices are displayed per £1 of nominal value, rather than the £100 convention sometimes used elsewhere.
Investors can select a gilt, review its price, coupon, maturity date and yield-to-maturity, then place an order in much the same way as buying a share.
Holding to maturity provides the scheduled coupons and face value, assuming the UK government meets its obligations. Selling early exposes investors to market prices, meaning they could receive more or less than they originally invested.
How does Lightyear compare for gilt investing?
Pricing is where Lightyear stands out. It charges individual investors £0 to buy or sell gilts and no ongoing custody fee.
By comparison, Hargreaves Lansdown charges an annual 0.35% on gilts and bonds, capped at £12.50 per month, alongside dealing charges. AJ Bell charges £5 per gilt trade, falling to £3.50 for frequent traders, plus a 0.25% annual custody charge capped at £3.50 per month. Interactive Investor offers gilts but operates subscription plans costing from £5.99 to £39.99 per month, with standard UK dealing charges ranging from £2.99 to £3.99.
Trading 212, meanwhile, currently provides UK government bond exposure through ETFs rather than individual gilts.
For investors specifically looking to buy individual gilts, Lightyear’s combination of no dealing fee, no platform fee and direct access to 20 gilts makes the launch a notable addition to the increasingly competitive UK investment-platform market.
Investing involves risk. Gilt prices move as interest rates change. Timing and rates affect returns; you may get back less than invested. This is not tax advice. Tax treatment depends on your personal circumstances and may change in future. Get advice if you’re unsure. Available in the UK only.
Richard is the founder of the Good Money Guide (formerly Good Broker Guide), one of the original investment comparison sites established in 2015. With a career spanning two decades as a broker, he brings extensive expertise and knowledge to the financial landscape.
Having worked as a broker at Investors Intelligence and a multi-asset derivatives broker at MF Global (Man Financial), Richard has acquired substantial experience in the industry. His career began as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson), following internships on the NYMEX oil trading floor in New York and London IPE in 2001 and 2000.
Richard’s contributions and expertise have been recognized by respected publications such as The Sunday Times, BusinessInsider, Yahoo Finance, BusinessNews.org.uk, Master Investor, Wealth Briefing, iNews, and The FT, among many others.
Under Richard’s leadership, the Good Money Guide has evolved into a valuable destination for comprehensive information and expert guidance, specialising in trading, investment, and currency exchange. His commitment to delivering high-quality insights has solidified the Good Money Guide’s standing as a well-respected resource for both customers and industry colleagues.
