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Terms and conditions

1 March 2007

Description and eligibility

1. National Savings and Investments (formerly known as National Savings) Children's Bonus Bonds (“Bonds”) are a UK Government security issued under the National Loans Act 1968. Bonds, and these terms and conditions, are subject to The Savings Certificates (Children's Bonus Bonds) Regulations 1991 (Statutory Instrument Number: 1991/1407) as amended or re-enacted from time to time (see paragraph 28). In the event of any differences between these terms and conditions and the Regulations, the Regulations will prevail.

2. Bonds may be bought by a person aged 16 or over for a child or young person aged under 16 on the purchase date, who will be the bondholder. Bonds may only be held in the name of, and for the beneficial ownership of, the bondholder. A Bond may not be held by two or more bondholders jointly. For each Bond purchased a person with parental responsibility must be nominated to receive correspondence and control the Bond until the bondholder is 16. Where two persons with parental responsibility are named on the application, we will send the Bond, and any correspondence, to the first named.

3. Bonds held until the bondholder's 21st birthday will earn interest at fixed rates, and a bonus, for each period of five years from the date of purchase. They will similarly earn interest and a bonus for any remaining period of less than five years which ends on the bondholder's 21st birthday. After that no further interest or bonus will be earned.

Definitions

4. In these terms and conditions;

(a)  “bondholder” means a child or young person aged under 16 on the day a Bond is bought;

(b)  “bondholding” means all Bonds held in the name of a bondholder;

(c)  “Director” means the Director of Savings;

(d)  “notify” means posting information to a person at their last address recorded at NS&I;

(e)  “NS&I” means National Savings and Investments operating through its Glasgow office or such other office as the Director may specify;

(f)    “person with parental responsibility” means a person who has parental responsibility (within the meaning of the Children Act 1989) for the bondholder. This will normally mean either or both of the parents of the bondholder, the guardian of the bondholder, or any other person with parental responsibility for the bondholder under a court order, or in the case of a mentally disordered bondholder, the receiver if different;

(g)  “post office” means a branch of Post Office Ltd in the UK.

Interest, bonus and tax relief

5. Each £25 Bond unit will grow in value during the five years from the date of purchase by an interest rate and fifth anniversary bonus (but see paragraph 23). The value of each Bond unit will be rounded to the nearest penny on each anniversary of purchase and on repayment. Different interest rates and bonus values apply to different Issues of Bonds and the details applicable to each Issue offered under these terms and conditions will be published in the London, Edinburgh and Belfast Gazettes. For details of the interest rates and bonus paid on the current Issue please see our Interest Rates leaflet available at post offices and from NS&I.

6. At the end of the initial period of five years the Director will notify terms as to further interest and bonus to apply from the fifth anniversary of purchase. The Director will take similar action at the end of each succeeding period of five years unless by then the bondholder has reached the age of 21.

7. For this purpose the Director will post a notice, normally 10 days before the end of the initial, or any succeeding, five year period, to either:

(a) the person with parental responsibility referred to in paragraph 2, if the bondholder is not yet aged 16; or

(b) the bondholder if aged at least 16.

8. The notice in paragraph 7 will give:

(a) the interest rates and bonus to apply to the Bond for the next five years; or

(b) the interest rates and bonus to apply to the Bond for any remaining period of less than five years until the Bond matures when the bondholder reaches the age of 21.

9. No further interest or bonus will be earned on a Bond once it has matured.

10. All interest and bonuses earned on a Bond are exempt from UK Income Tax and Capital Gains Tax.

Purchasing and holding limits

11. You may buy Bonds, in one or more units of £25, by applying by post to NS&I or in person at any post office which carries out NS&I business. In accepting the terms and conditions you are confirming that you, and anyone else named on the application, are aware that your and their identity and address will be checked as detailed in the Children’s Bonus Bonds sales brochure. We may also write to you requesting documentary evidence of your identity and address. The letter requesting evidence of identity will specify the time within which the evidence must be returned to NS&I. If the evidence is not received at NS&I within the specified time the Director will not be able to process your application. We will let you know if this is the case.

12. In all cases, an application to purchase is subject to acceptance by the Director: where you apply at a post office, acceptance can only occur when the application is subsequently processed by NS&I. If accepted, the date of purchase will be:

(a) for applications sent by post, the date your application and payment were received at NS&I;

(b) for applications at a post office, the date your application and payment were received at the post office.

13. A bondholder may not hold less than £25 (1 unit) or more than a total of £3,000 (120 units) at purchase price in Children's Bonus Bonds of each Issue or such larger amount as the Treasury may from time to time decide. The Treasury will give notice of any change under this paragraph.

14. To fill in the purchase form, you will, where necessary, need to:

(a)  check with everyone who has parental responsibility that the purchase, with any other Children's Bonus Bonds of the current Issue the child or young person may already hold, will not take the holding above the maximum limit of £3,000 at purchase price;

(b)  obtain from them the Holder's Number, where the child or young person already has a holding of Bonds, and quote it on the purchase application;

(c)  obtain from them any other information necessary to complete the application and declaration.

15. A Bond in the name of the bondholder will be sent to the person with parental responsibility referred to in paragraph 2. Unless you request otherwise on the purchase application your name will be shown as the person who gave the Bond to the bondholder. You will, however, have no control over the Bond unless you are a person with parental responsibility.

16. If you should in error complete an application which would take the total holding of a bondholder over the holding limit then, in respect of the excess amount:

(a)  the value will be returned to you if the error comes to light before the Director puts the Bond into the post; or, if later

(b)  the value will remain the property of the bondholder and may earn interest at the discretion of the Director at such rate as the Treasury may determine. Such interest will be liable to UK income tax. The Director will notify the person with parental responsibility referred to in paragraph 2, or the bondholder if aged at least 16, of the excess so that it can be repaid or reinvested in another NS&I product.

Control of Bonds

17. Until the bondholder is aged 16 the control of each Bond will normally rest with the person with parental responsibility referred to in paragraph 2.

18. While the bondholder is aged under 16 the Director may repay a Bond, or part of a Bond, to any person who satisfies the Director that he or she is a proper person to receive payment on behalf of the bondholder. This will normally be the person with parental responsibility referred to in paragraph 2. If there are two such persons the Director may ask both to sign for any repayment.

19. Decisions on a Bond will rest with the bondholder when he or she reaches 16, or with any receiver appointed.

Cashing in when the Bond matures

20. The Bond will mature on the bondholder's 21st birthday. The bondholder may cash in the Bond on the maturity date by completing a form and sending it to NS&I with the Bond. By way of reminder the Director will notify the bondholder of the need to give instructions for repayment on maturity.

Cashing in before the Bond matures

21. Bonds bought by cheque can only be cashed in after your payment has cleared. The time taken for payments to clear is detailed in the NS&I Children’s Bonus Bonds brochure. Bonds may be cashed in, before they mature, by the bondholder if aged at least 16; or if under that age normally by the person with parental responsibility referred to in paragraph 2 on behalf of the bondholder (see paragraph 18). To cash in a Bond, complete a form (available at post offices and from NS&I) and send it to NS&I with the Bond.

22. If a Bond is made up of more than one £25 unit then part of a Bond, in one or more whole units, may be cashed in, together with any interest or bonus the units to be repaid have earned. Where part of a Bond has been cashed in, a replacement Bond, retaining the purchase date of the original Bond, will be issued for the remaining units.

Amount due on cashing in

23. A Bond unit cashed in before its first anniversary of purchase will be repaid at purchase price.

24. A Bond unit cashed in on an anniversary of its purchase date up to and including its fifth anniversary will be repaid at the value for the anniversary shown on the Bond. A Bond unit cashed in on a later anniversary will have the value as notified by the Director (see paragraph 6).

25. A Bond unit cashed in between anniversary dates will have the value at its most recent anniversary date plus interest on that value to the date of repayment if repaid before the fifth anniversary of purchase. This interest will be earned for each day, starting on the most recent anniversary date, up to but not including the date of repayment (for details of the interest see the Interest Rates leaflet current at the time of purchase). If cashed in after the fifth anniversary the Bond unit will be valued similarly but using the anniversary value and rate of interest as notified by the Director (see paragraph 6). Interest from the most recent anniversary date will be calculated on a daily basis at 1/365 of the annual interest rate for each day (or 1/366 of the interest rate for each day in a calendar leap year).

26. A Bond unit cashed in on its maturity date will have the value as notified by the Director (see paragraph 6).

Payment warrants

27. Repayments will normally be made by crossed warrant and the date of repayment will be taken to be the date on the warrant.

Regulations

28. As at 1 February 2007, The Savings Certificates (Children's Bonus Bonds) Regulations 1991 (Statutory Instrument Number: 1991/1407) have been amended by the following Statutory Instruments:

1992/3113

1997/1860

2005/2114

2005/2078

Law and jurisdiction

29. These terms and conditions and any agreement made on the basis of them will be governed by and interpreted in accordance with English law.

30. Subject to paragraphs 31 and 32, the courts of England are to have exclusive jurisdiction to settle any dispute (including claims for set off and counterclaims) which may arise in connection with these terms and conditions or any agreement made on the basis of them and which, subject to the Regulations, falls to be determined by a court of law.

31. Where section 16 of the Civil Jurisdiction and Judgments Act 1982 applies the relevant court of law of the relevant part of the United Kingdom shall have jurisdiction to settle any such dispute.

32. Paragraphs 30 and 31 are included for the benefit of NS&I. Accordingly NS&I retains the right to bring proceedings in any other court which has jurisdiction to whose jurisdiction the holder irrevocably submits.

Children's Bonus Bonds
National Savings and Investments
GLASGOW
G58 1SB

1 March 2007

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