How To Buy UK Gilts (Directly, Best Platforms & Cheapest Way)

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Buying gilts has become more popular among investors as the economy and interest rates have seen increased volatility. In this guide, we explain how to buy Government Gilts, what they are, where to buy them and the potential risks and rewards of buying “gilt-edge” government bonds.

Best Brokers & Platforms For Buying Gilts

Gilt BrokerBonds AvailableGilt Dealing CommissionGilt Account FeeOur RatingMore Info
Hargreaves Lansdown bond investing platform10,000+£11.95 (or £5.95 if more than 20 deals done in previous month)0.45% capped at £45 per annum
See Bonds
Capital at Risk
Interactive Investor bond investing platform10,000+£7.99 or £3.99 for “Super Investors”£4.99 a month
See Bonds
Capital at Risk
AJ Bell Youinvest bond investing platform5,000+£9.95 (or £4.95, if you do 10 or more online deals in the previous month)0.25% capped at £3.50 per month
See Bonds
Capital at Risk

Hargreaves Lansdown

Hargreaves Lansdown has an excellent free-to-view market data portal where you can view bond and gilt prices.

  • Gilt dealing commission: £11.95
  • Gilt account fees are 0.45%

Hargreaves Lansdown Gilts

Interactive Investor

Interactive Investor charges a low flat monthly fee for all their investing accounts.

  • Gilt dealing commission: £7.99
  • Gilt account fee: £4.99 a month.

Interactive Investor Gilts

AJ Bell

AJ Bell is a well-established low-cost investment platform.

  • Gilt dealing commission: £9.95
  • Gilt account fee: 0.25%.

AJ Bell Gilts

Saxo Markets

Saxo is for advanced and professional investing. Bond dealing commission: 0.2% to 0.05%. You can only trade Gilt, futures or ETFs on Saxo Trader GO.

Interactive Brokers

You can’t trade individual UK gilts on the IBKR portal, but you can buy Gilt ETFs, which give you access to a range of Gilts.

How To Buy UK Government Gilts

You can buy UK Government bonds either directly from the DMO or through various bond brokers (see here for US ones) and investment platforms.

The process for buying gilts is:

  1. Search for a Gilt that fits your investment criteria and look up the symbol for that instrument (for example TR60 for the 4% Treasury Gilt 2060) .
  2. Be careful to note the coupon payment (normally in percentage), maturity date, current prices.
  3. The price you purchase will determine your overall return. Gilts are issued at £1, but go up and down based on the Bank of England interest rates and how risky they are considered.
  4. Gilts are redeemed by the Treasury at £100 (known as “par”). Gilt investors make money via a combination of coupons and capital gains at maturity.

For instance, on Interactive Investor’s bond website you can find a small list of gilts available to trade on the platform.


Five important factors to consider when buying gilts

When we talk about buying government bonds like gilt, we focus on a few factors, like:

  • Current yields – how much is the bond offering investors now?
  • Maturity – how many more years do the debt instrument last?
  • Credit ratings of the borrowing entity – is the organisation financially viable?

As you can see above, gilts of different maturities offer different yields.

Assuming the credit rating of the UK government remains strong for the time being (AA-stable by Standard & Poor’s), the next two important factors are yield and maturity. How long do you intend to hold the debt for? Is the yield compensating investors sufficiently?

Recent data from bond brokers like Interactive Investor show that investors are picking up the near-term gilts (those maturing within 24 months). Yields are high; holding period short. A good parking place for surplus capital.

More crucially, during these hectic days there are two additional factors to consider:

  • Trend of rates – Will interest rates rise much further in the coming months and stabilise at a level higher than current expectations? If interest rates were to overshoot to the upside, it means bond prices will drop further from here.
  • Real interest rates – Will nominal rates compensate investors enough for the inflation?

A quick back-of-the-envelope calculation (inflation at 8%, roughly; base rate at 5%) shows UK’s real interest rate is still negative. That means the purchasing power of cash is being eroded over time.

Gilt ETFs for your portfolio

Average investors need to diversify. In doing so, it reduces the overall portfolio risk. Asset diversification balances the risk.

With near-term gilt yields now floating above 5 percent, interest in the sector is rising. However, instead of buying individual gilts, a portfolio of gilts may be more appropriate for some investors.

For example, the iShares 0-5 year Gilt (IGLS) is an exchange-traded fund (ETF) that holds a portfolio of gilts with maturities ranging from 0 to five years. According to its factsheet, more than 50 percent of IGLS’s £1.9 billion gilt portfolio matures within 24 months. A bond ETF, like many equity ETFs, may track a bond index. Here IGLS tracks the “FTSE UK Conventional Gilts – Up To 5 Years Index“.

From a high of 135, the ETF has dropped to 122 last year due to the surging interest rates. Recent price action turned bearish as interest rates surge further. Right now, the ETF’s yield-to-maturity fetches about 5 percent.

Another ETF that may interest readers is the iShares Gilt ETF (IGLT). This £1.7 billion bond fund (factsheet here) follows the “FTSE Actuaries UK Conventional Gilts All Stocks Index”.

There is another sector that may be worth a look – index linked gilts. These bonds are linked to the price index Retail Price Index (PRI). Coupons and principal of the bonds are adjusted according to a set rules using the RPI index. These adjustments helps to offset the erosion of buying power of capital. You can find out more about index linked gilts from the Debt Management Office (DMO).

There is a bond ETF that holds just indexed linked gilts. This is the £700 million iShares index-linked Gilt ETF (INXG, factsheet here). Due to the long-maturity of its gilt holdings, the bond is particularly volatile. In 2022, the ETF’s total return was a shocking -34 percent. In the US, the equivalent is the TIPS Bond ETF (TIP).

How do government gilts work?

Gilts are government bonds, which is a financial instrument with a promise – a promise to pay a certain sum in the future. In this case, the debtor is the UK government.

It works like this. The UK government borrows money from the market to spend; it then raises revenue from the economy via taxes; and uses the tax revenue to repay interest and capital to the creditors.

Sometimes, the government will use new borrowings to retire old borrowings when it is cheaper to do so. The most recent statistics (April 2023) show the total UK debt borrowings to be £2.516 trillion – an addition of £100 billion a year (see below).

Source: ONS (28 Apr 2023)

How safe are government gilts?

Not all sovereign debtors are equal. What differentiates sovereign bonds are the rate of interest, collateral, duration, and sums to borrow.

Creditors certainly want to borrow from sovereign governments that can repay. This ability to repay is measured crudely by sovereign credit ratings. Third-party professional firms called rating agencies (S&P, Fitch, and Moody’s) assigned these ratings to nearly all governments that issue bonds. The UK has enjoyed good ratings in recent years. The chart below compares the S&P sovereign ratings across the world. The UK is currently double A investment grade (2Q 2023)

Source: S&P/Wiki

What is the relationship between gilt yields and price?

The relationship between bond yield and price is simple: They move in the opposite direction. Look at the chart below. Here I use a US bond ETF (IEF) as an example.

As US bond price dropped throughout the past year (blue line), the 10-year bond yield rose (orange line). In other words, the higher the bond yield, the lower the price.

Bonds versus gilts

Generally speaking, shorter-maturity government bond yields (maturities of less than two years) track the central bank policy rate closely.

This means that as central bank raises the policy rate, these 0-2 year yields rise too. Longer maturity bonds, however, may not track the policy rate that closely for a variety of reasons, including inflation expectations.

  • Further reading: You can read more about how bonds work here in our bond guide.
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