Important information: The website does not constitute a personal recommendation. Treasury bills are designed to be held until maturity, once you’ve invested your money, it’s locked in for the duration of the term. If you have any doubts as to the suitability of an investment, please contact us for advice. Tax rules can change and benefits depend on personal circumstances.
Treasury Bills are another way the UK government can raise money for public spending, like they do with Government bonds (gilts). But where gilts pay regular interest (called coupons), Treasury bills don’t earn interest payments.
The investment return comes solely from the difference between the price the Government sells to investors (typically less than £100) and the redemption price the Government pays back (£100).
Treasury bills are designed to be held until maturity. This means that once you’ve invested your money, it’s locked in for the duration of the term.
EXAMPLE: You invest £1,000 in a 6 month Treasury Bill, paying £97.50 per bill. After 6 months the Government pays you £100 per bill. Your initial investment of £1,000 is returned along with an additional £25 giving you a 2.5% yield or an annualised equivalent yield of 5%.
Investing in UK Treasury bills isn’t right for everyone. You should only invest if the bill’s terms align with your own investment objectives, and there’s a specific need for this type of investment within your portfolio.
It’s also important to not put all your eggs in one basket. Spreading your money (diversifying), gives you access to more opportunities and can reduce risk by investing in more individual market areas. Find out more about diversification.Think about Treasury bills if…
- You want the lower risk of a gilt or bond but for a shorter time.
- You have a pension that you can’t move into a cash account and want access to simple low risk returns.
- You want to avoid using your Capital Gains Tax allowance.
Think about alternatives if…
- You’re not willing to risk losing your money.
Find out if you should be saving or investing. - You want easy access to your cash.
See easy access accounts with Active Savings. - You want to earn income while your money is invested.
Explore gilts and bonds.
How are Treasury bills priced when bought through HL?
Treasury bills are purchased through an auction process. HL will place a bid based on the target size and yield.
Once bids are accepted, the number of Treasury bills will be allocated at the lowest bid yields until the target size is reached. You won’t know the exact price per bill until after you have submitted your investment instruction.
Please note that Treasury bills have a minimum investment value of £1,000 when purchasing through HL.
Why buy Treasury bills?
- They’re lower risk – like gilts, Treasury bills are sold by the UK government. So, the only way to lose your whole investment is for the government to default on its debts, which is very unlikely.
- They mature quicker – Treasury bills have a much shorter time until maturity than traditional gilts. Typically, one, three or six months.
- They can be held in tax efficient accounts – the yield from Treasury bills is subject to income tax. But they can be held in a Stocks and Shares ISA and a Self-Invested Personal Pension (SIPP), which means the yield can be paid free of UK income tax. Tax rules can change and benefits depend on personal circumstances.
What are some of the risks of Treasury bills?
- Fixed term – Treasury bills can’t be sold on the secondary market. This means you can’t get your money out until maturity.
- High inflation – if the return from a Treasury Bill is lower than the rate of inflation, your cash is losing its spending power.
- Purchased at auction – you won’t know how much the Treasury Bill will cost until after the auction period has ended which also means you won’t know what yield to expect.
How to buy Treasury bills through HL?
Once you have an account and are familiar with Treasury bills, you can deal online or contact us to deal over the phone.
Treasury bills might not be suitable for all investors and capital is not guaranteed. If you are unsure of the suitability of an investment for your circumstances, please seek personal advice.
Get started by opening an account today or try our interactive account filter for our full range of account options.
You can hold Treasury bills, alongside other investments, in any of our investment accounts. Here are two of our most popular.
Fund and Share Account
- Free to hold treasury bills
- Unlimited top ups
- Only £1 to open
Stocks and Shares ISA
- 0.45% annual charge to hold treasury bills (maximum £45)
- Pay in up to £20,000 this tax year
- Minimum £100 to open
The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money.