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Taxation (UK) · Gains and losses on the disposal of shares and securities

Gilts and Qualifying Corporate Bonds for CGT

Updated 11 October 2026 · Fact-checked

Gilt-edged securities and qualifying corporate bonds (QCBs) are exempt assets for individuals' capital gains tax. A disposal gives no chargeable gain and no allowable loss. So you leave them out of the computation, and you cannot use any loss on them against other gains or the annual exempt amount.

Understand Gilt-Edged Securities and Qualifying Corporate Bonds

Most assets are chargeable assets. When you sell them at a profit, you compute a gain. A few assets are exempt assets. Gilts and qualifying corporate bonds are two of them.

Gilt-edged securities (gilts) are UK government bonds. Qualifying corporate bonds (QCBs) are loan stock issued by companies that meet set conditions. In outline, the bond must be a normal commercial loan, repayable in sterling, and not convertible into shares. In the exam, the question usually tells you whether a bond is a QCB, so you rarely need to test the conditions yourself.

Both are exempt, so a disposal produces no chargeable gain and no allowable loss. The result is the same whether you sell at a profit or a loss. The gain is simply not taxed. A loss is simply not relievable.

This is a classic trap. Many students compute a loss on a QCB and set it against other gains. That loses marks. The loss is ignored completely.

Shares are different. Ordinary shares in a company are chargeable assets. A company's loan stock that is not a QCB, for example a convertible bond, is also chargeable. So always check what type of security you are dealing with.

Key rules to remember

Gilts
Disposal of gilt-edged securities = exempt: no gain, no loss
Applies for individuals. Leave the disposal out of the CGT computation.
Qualifying corporate bonds
Disposal of QCB = exempt: no gain, no loss
Check the question states the bond is a QCB. A convertible bond or a share is not a QCB.
Net chargeable gains
Chargeable gains − allowable losses (chargeable assets only) − annual exempt amount (£3,000)
Exempt assets never enter this calculation. The annual exempt amount is given in the tax rates and allowances.
CGT rates for individuals
18% in the basic rate band, 24% above it
Rates apply to taxable gains on chargeable assets, after the annual exempt amount.

How to solve Gilt-Edged Securities and Qualifying Corporate Bonds questions

Use this method whenever a question lists several disposals including bonds or government securities.

  1. 1List every disposal the person made in the tax year.
  2. 2Classify each asset: gilt, QCB, ordinary shares, other chargeable asset or other exempt asset.
  3. 3Cross out gilts and QCBs. Show a line saying 'exempt, no gain or loss' so the marker sees you spotted it.
  4. 4Compute gains and losses on the remaining chargeable assets only, using the usual rules.
  5. 5Deduct current-year losses in full. Then deduct brought-forward losses only to the extent needed to reduce the net gains to the annual exempt amount (£3,000), so the annual exempt amount is not wasted. The annual exempt amount then covers the remainder, leaving taxable gains of nil. Any unused brought-forward losses are carried forward.
  6. 6Work out the taxable gain, then the CGT at 18% or 24% depending on the unused basic rate band.
  7. 7State clearly that any loss on a gilt or QCB is not allowable.

Quickest way: Spot and strike out

When to use it: Use this in objective test questions and in the first minute of a longer computation.

  1. Underline the word 'gilt' or 'qualifying corporate bond' in the scenario.
  2. Write 0 next to that disposal. Do not work out any gain or loss.
  3. If the question asks for the total loss available, ignore that loss.
  4. Run the normal computation on whatever is left.

Common mistakes in Gilt-Edged Securities and Qualifying Corporate Bonds

  • Offsetting a loss on a QCB against other gains

    Students treat every loss as relievable, as with shares.

    Fix: Remember that exempt means no gain and no loss. Strike the whole disposal out.

  • Taxing a gain on gilts

    The gain looks large and students compute it from habit.

    Fix: Check the asset type first, before working out proceeds and cost.

  • Assuming all company bonds are QCBs

    Both are loan stock, so they seem the same.

    Fix: A QCB is a straightforward non-convertible sterling loan. A convertible bond is not a QCB and its disposal is chargeable. Use the facts given.

  • Putting gilts into the share matching rules or section 104 pool

    Students see 'securities' and apply the share rules automatically.

    Fix: Exempt securities do not need matching. Deal with them first and drop them.

  • Using the annual exempt amount against an exempt gain

    Students think the annual exempt amount must be used up on something.

    Fix: The exempt asset gives no gain, so nothing uses the £3,000. Only chargeable gains are reduced by it.

Worked examples

Example 1

In the tax year, Priya sold UK government gilts for a gain of £14,000 and sold shares in X plc for a gain of £9,000. She has no losses and has not used the annual exempt amount. Calculate her taxable gain.

Show the solution
  1. Gilts are exempt assets, so the £14,000 gain is not chargeable. Ignore it.
  2. Chargeable gains: shares in X plc £9,000.
  3. Less annual exempt amount £3,000.
  4. Taxable gain: £9,000 − £3,000 = £6,000.

Answer: Priya's taxable gain is £6,000. The gilt gain is exempt.

Example 2

Tom sold a qualifying corporate bond at a loss of £8,000. In the same year he sold a painting (a chargeable asset) for a gain of £11,000. Tom has no other disposals or losses. Calculate his taxable gain.

Show the solution
  1. The QCB is exempt, so the £8,000 loss is not allowable. Ignore it.
  2. Chargeable gain: painting £11,000.
  3. Less annual exempt amount £3,000.
  4. Taxable gain: £11,000 − £3,000 = £8,000.

Answer: Tom's taxable gain is £8,000. The QCB loss cannot be used.

Exam tips

  • In an objective test, a question often tempts you to subtract a QCB loss. Do not.
  • Read the description of each security closely. A convertible bond is a chargeable asset.
  • In a written answer, show a one-line note that gilts and QCBs are exempt. It earns the mark even though the figure is nil.
  • Remember the £3,000 annual exempt amount comes from the tax rates and allowances. It applies only against chargeable gains.

Practice questions from Gains and losses on the disposal of shares and securities

Gilt-Edged Securities and Qualifying Corporate Bonds: frequently asked questions

Are gilts and qualifying corporate bonds exempt from CGT?

Yes. For individuals, a disposal of either gives no chargeable gain and no allowable loss. You leave it out of the computation.

Can I use a loss on a QCB against other gains?

No. Because the asset is exempt, the loss is not allowable. It cannot be set against current gains or carried forward.

What is the difference between a gilt and a QCB for CGT?

For CGT purposes they are treated the same: both are exempt. A gilt is a UK government bond. A QCB is a company bond that meets the conditions.

Is a convertible bond a qualifying corporate bond?

No. A bond that can be converted into shares does not qualify, so its disposal is chargeable. Treat it like other chargeable securities.