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Media centre /
Press releaseSAVERS ESCAPE £100 MILLION TAX BILL IN ONE YEAR23 July 2004NS&I tax-free Savings Certificates help maximise returns Astute British savers who deposited their money in National Savings and Investments' tax-free Savings Certificates have saved themselves more than £100 million in tax in the 12 months to April 2004. The interest earned on an investment in Savings Certificates is tax-free but, if the interest had been liable to tax, customers would have paid a total of £116 million between April 2003 and April 2004 (see Notes to Editors, 1). Money invested in Index-linked Savings Certificates and Fixed Interest Savings Certificates during the year earned over £580 million in interest which, had it been taxable, would have yielded £116 million in tax. Regional data Even in Northern Ireland, where a relatively small number of people hold Savings Certificates, investors managed to avoid a total tax penalty of £1.7 million between April 2003 and April 2004 (for full regional data see Notes to Editors, 2). Brits unaware of inflation and tax Safe investment, good returns Karen Ritchie, independent financial adviser with Finance4Women, added: "The interest rates on Savings Certificates look especially competitive at the moment, both for higher rate and basic rate taxpayers. Additionally, they offer complete capital security because they're backed by the Treasury. This means you can tie up your money for a number of years knowing it's going to be safe and, at the end of the investment term, you'll see a healthy return." How Savings Certificates work The value of Index-linked Savings Certificates moves in line with the rate of inflation (Retail Prices Index) and, in addition, offer guaranteed rates of interest. They provide tax-free and inflation-beating returns and are available in 3-year and 5-year terms. Fixed Interest Savings Certificates offer fixed rates of interest so customers know at the start how much interest they will receive. Tax-free, they are available in 2-year and 5-year terms. Anyone aged seven or above can invest between £100 and £15,000 in each Issue of Savings Certificates, and a new Issue becomes available whenever National Savings and Investments changes the interest rates on offer. Customers do not need to declare their investment in Savings Certificates to the Inland Revenue, nor do they have to declare the tax-free returns they receive. Savings Certificates are on sale all year round meaning that NS&I, unlike many other high street providers, always has fixed rate offers available to savers and investors. Interest rates and equivalent returns
(These figures assume the RPI rises by 3.0% each year for the next five years and current rates of tax) Fixed Interest Savings Certificates
(These figures assume current rates of tax) How to buy Savings Certificates
Application forms can be downloaded from www.nsandi.com and are available at Post Office branches. ENDS Notes to Editors1. The interest earned on an investment in Savings Certificates is tax-free, but NS&I has calculated that if, in fact, customers did have to pay tax on the interest, they would have paid a total of £116 million between April 2003 and April 2004. This assumes all holders are liable only to basic rate income tax paying as the savings rate of 20%. 2. Regional data league table
3. Research conducted among 1,011 adults by TNS via PhoneBus, 6-8 February 2004. 4. Fixed Interest Savings Certificates were introduced in February 1916. Index-linked Savings Certificates were introduced in June 1975 as a way of protecting against high inflation at the time. 5. National Savings and Investments is one of the largest savings organisations in the UK, offering a range of savings and investments products (to 30 million customers). All products offer 100% security, because they are backed by HM Treasury. 6. For further information, interviews, case studies and digital images, contact the NS&I Media Team. An ISDN line is available for interviews: 020 7602 4522.
Media team The numbers below are for media use only. Customers wishing to contact NS&I can find details here.
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