Finance glossary
Gilt
Also known as: Government bond, UK gilt
In simple terms
A gilt is a loan you make to the UK government. In return it pays you regular interest and promises to pay your money back on a set date.
On this page
What does gilt mean?
A gilt is a bond issued by the UK government to borrow money. When you buy one you are lending to the government, which pays you a fixed rate of interest (the “coupon”) and repays the face value on the maturity date.
Gilts are generally seen as low-risk because the UK government is considered very unlikely to default — though they are not risk-free.
How gilts work
Gilts can be held to maturity for their fixed interest and return of capital, or traded before then. Their market price moves with interest rates: when rates rise, the price of existing gilts usually falls, and vice versa.
Some “index-linked” gilts have their payments adjusted in line with inflation.
How could this affect me?
Gilts are often used to add stability and income to a portfolio, especially as people approach retirement. But if you sell before maturity you could get back less than you paid if rates have risen.
The income is interest, which may be taxable outside a tax-sheltered account like an ISA or pension.
Things to watch out for
- Low risk is not no risk — gilt prices fall when interest rates rise.
- Sell before maturity and you may get back less than you paid.
- Fixed income can be eroded by inflation unless the gilt is index-linked.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- Bank of England, What are government bonds (gilts)? (opens in a new tab). Accessed 22 Aug 2026.
- MoneyHelper, Bonds and gilts explained (opens in a new tab). Accessed 22 Aug 2026.