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Press releaseNATIONAL SAVINGS AND INVESTMENTS RATE CHANGES25 April 2007First new issues of Inflation-beating Savings since October 2006, now available Equivalent returns of up to 10.25% per year (see table) Investors can protect their savings against inflation with new issues of NS&I’s (National Savings and Investments) Inflation-beating Savings Certificates. Following an increase in the yield on Index-linked gilts, NS&I has announced it will increase the fixed rate of interest it pays, on top of the rate of the Retail Price Index (RPI), on its inflation-beating Index-linked Savings Certificates. From 25 April 2007, rates on both its three and five year certificates will increase, by 0.20 per cent and 0.25 per cent respectively, to 1.35% AER. Assuming the RPI remains at its current rate of 4.8% p.a. over the term of the certificates they will pay a rate of 6.15% AER tax-free1. Anyone aged seven or over can invest from £100 up to £15,000 per Issue (a new issue becomes available each time NS&I changes the interest rate on Savings Certificates), and they may be bought for children under seven. Inflation-beating Savings are the only savings products on the market that offer a safe, tax-free1 home, and an inflation-beating return. Customers can cash in their certificates at any time but need to hold them for at least a year to benefit from index-linking and extra interest. Because Index-linked Savings Certificates offer a tax-free1 return that beats inflation, it makes them particularly attractive for basic as well as higher rate taxpayers. Assuming the RPI remains at its current rate of 4.8% p.a. over the term of the certificates, basic rate taxpayers would need to find a taxable product paying a net rate of 7.68% to match this rate, and higher rate tax-payers similarly 10.25%. All other NS&I products remain unchanged. Investment terms and interest rate
*These figures assume the RPI rises by its current rate of 4.8% each year over the term of the certificate and current rates of tax Investing tax-free1 As a consequence of the interest rate increase, new issues of the three and five-year terms of Index-linked Savings Certificates are now available, allowing savers to invest a further £30,000 in total, tax-free1. There has not been a new issue of the three-year certificate since 26 October 2006 and of the five-year certificate since 20 June 2006. How do Inflation-beating Savings work? The money invested in Index-linked Savings Certificates earns a return directly linked to the Retail Prices Index (RPI) – currently at 4.8% – plus guaranteed rates of interest on top. This means the returns outstrip inflation and, as nothing is taken away in tax, the spending power of the investment is increased by the end of the term. John Prout, NS&I sales director said: “Inflation beating savings offer savers an easy way of ensuring their investment grows ahead of inflation. Savings Certificates provide a safe and secure tax-free home for their money.” ENDS Notes to editors 1. Tax-free means that interest is exempt of UK income Tax and Capital Gains tax
Media team The numbers below are for media use only. Customers wishing to contact NS&I can find details here.
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