A treasury bill is a short loan to the government, from three months to a year. You buy it for less than its face value and get the full value at the end of the term. The difference is your return.

The tax comes out of the return

The yield you see quoted is before tax. 20% is taken from the return itself, not from the whole amount, so you receive 80% of the quoted return.

An example

If a one year bill is quoted at 26%, the yield after tax is about 20.8%. On 100,000 pounds that is about 20,800 pounds instead of 26,000.

How to compare

Always compare the after tax number with certificate yields, because a certificate's quoted yield is what you receive. That is why the treasury bills page in Geneh shows the yield before and after tax side by side.

This guide explains how things work and is not financial advice. Check the current numbers in Geneh before you decide.