Income Bonds - Invest now

1 February 2008

Description

1. National Savings and Investments (formerly known as National Savings) Income Bonds (“Bonds”) are a UK Government security issued under the National Loans Act 1968. Bonds are registered on the National Savings Stock Register and are subject to The National Savings Stock Register Regulations 1976 (Statutory Instrument Number: 1976/2012) as amended or re-enacted from time to time (see paragraph 36). In the event of any differences between these terms and conditions and the Regulations, the Regulations will prevail.

Definitions

2. In these terms and conditions:
(a)  “banking day” means a day (other than a Saturday, Sunday or bank holiday) on which banks are generally open for business in London, and, in relation to the processing of a payment, any other place of receipt;
(b) “Director” means the Director of Savings;
(c)  “NS&I” means National Savings and Investments operating through its Blackpool office or such other office as the Director may specify.

Interest and UK Income Tax

3. Bonds earn interest at a variable rate set by the Treasury (“the Treasury rate”). For each day Bonds held under the same Customer Number (previously called Register Number) have a total capital value of at least £25,000 they will also earn interest at a variable bonus rate also set by the Treasury (“the bonus rate”). Interest, which is paid monthly in arrears, is earned on a daily basis at 1/365 of the annual interest rate for each day held (or 1/366 for each day in a calendar leap year). This includes the day of investment but not the day the Bond is cashed in.

4. The Treasury may from time to time change the Treasury rate, change or
withdraw the bonus rate, and change the qualifying capital value for the bonus rate, upon giving notice in accordance with paragraph 35. Details of the rates applying from time to time will be set out in our Interest Rates leaflet available at post offices and from NS&I.
 
5. The Treasury may from time to time change the intervals at which interest is paid, and the day of the month on which it is paid (see paragraph 6), upon giving notice in accordance with paragraph 35. In doing this, the Treasury may specify holding limits above or below which any change will apply. No such change will apply to a Bond you already hold unless you agree.

6. Subject to paragraph 5, interest is paid on the 5th day of each month (“an interest payment date”). If that day falls on a day which is not a banking day your account may not be credited until the next banking day. The Director may pay the interest your Bond earns during the six week period starting on the date of investment on the first interest payment date after this period.

7. You can only hold more than one Bond under the same Customer Number if they are held in the same name or, if a joint holding, names (and in the case of a trust, for the same beneficiaries under the same trust). For any additional investment in a Bond to be registered under an existing Customer Number you need to quote the number on making your application. If you have a holding in different Customer Numbers and wish the holding to have one Customer Number you should apply under paragraph 33. The date the holding will be treated as having the same Customer Number will normally be the first interest payment date after the application has been received. The responsibility for ensuring that Bonds are held under the same Customer Number rests with the holder.

8. Interest will be paid by direct credit to a bank account (including a National Savings Investment Account or Easy Access Savings Account) or building society account. The Director intends to use the Bankers’ Automated Clearing Service (BACS) for this purpose so the account you nominate on your application must be capable of receiving payment by this method. However, if you already hold a Bond on which interest is paid by warrant you may have the interest on any Bond held under these terms and conditions paid in the same way. Only one account or method of payment can be nominated for each holding of Bonds. You may change the method of payment for interest on your Bond but may only choose payment by warrant if you are holding a Bond issued under terms and conditions (dated before 1 January 1990) which provide for payment by warrant.

9. Interest will be paid without deduction of tax. However it is subject to UK Income Tax so investors will need to declare their interest to the Inland Revenue.

Who may invest in Bonds

10. Individuals. If you are an individual of at least 7 years of age, you may invest in a Bond:
(a)  in your own name; or
(b)  jointly with one other individual.
You may hold more than one Bond in either or both of these capacities.

11. Children. A child under 7 years of age cannot invest in a Bond. Investment may be made for a child under 7 years of age with the Bond held in the name of, and as the property of, the child. Investment may similarly be made for two such children to be held in their names jointly.

12. Trustees. If you are a trustee, you may invest in a Bond as a trustee either by yourself or jointly with one or more other trustees. A corporate trustee may also invest in a Bond. The trust may have up to two beneficiaries who must be individuals (but a beneficiary whose interest only takes effect on the death of another beneficiary is disregarded for the purpose of this limit).

13. Deputies. If you are a deputy with the power to make investments on behalf of a person who lacks capacity (or if you are a person duly authorised in that behalf), you may invest in a Bond on behalf of and in the name of that person.  

14. Others. Bodies, corporate or unincorporate, may invest in a Bond only if they already hold a Bond (otherwise than one issued under these terms and conditions) and the new Bond will be held in the same name (and in the case of a trust, for the same beneficiaries under the same trust) as the Bond already held.

15. General. Subject to paragraphs 10 to 14 (inclusive), investment in a Bond may not be made by a person under a legal disability.

How to invest

16. You may invest in a Bond by applying via the internet, by telephone or by post to NS&I. Where you apply via the internet or by telephone and this is your first investment in Bonds, you must confirm your application by signing and returning a confirmation form we will send to you by post. 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 Income Bonds brochure. We may also write to you requesting documentary evidence of identity and address. The form and/or letter requesting evidence of identity will specify the time within which the signed form and/or evidence must be returned to NS&I. If the form and/or 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.

17.  In all cases, an application to invest is subject to acceptance by the Director. If accepted the date of investment will be:
(a)  for applications sent by post, the date your application and payment were received at NS&I;
(b)  for applications via the internet, the date your on-line application, including authority for a debit card payment, were received at NS&I;
(c)  for applications made by telephone, the first date by which NS&I took the details of your application, including authority for a debit card payment.

18. We will send you a certificate of investment showing the value and date of investment.

Investment and holding limits

19. The minimum you can invest in a Bond is £500. The minimum holding of Bonds (for example after any part encashment) is £500.

20. You may not invest in or hold a Bond if immediately afterwards you would hold, in the same legal capacity, either solely or jointly with another person, more than £1,000,000 in Bonds. A trustee of separate trust funds will be taken to have a different legal capacity in respect of each fund.

21. A Bond you inherit from a deceased holder will not count towards the maximum limit. A Bond you hold as a trustee will also not affect the amount you may hold beneficially, nor will a Bond held in trust for a beneficiary count towards the maximum limit of that beneficiary's holding in his own name. Although the maximum limit does apply to a trust holding, each trust is treated separately.

Cashing in by you

22. You can cash in a Bond at any time in accordance with paragraphs 25 & 30.

23. The capital value of a Bond to be cashed in will earn interest due under paragraphs 3 to 5 (inclusive) from the date of investment up to but not including the date it is cashed in. Any interest earned but not yet paid will be added to the capital to be cashed in.

Partial encashments

24. You can give us instructions in accordance with paragraphs 25 & 30 to cash in part of a Bond. The minimum amount that can be cashed in is £500 and at least £500 must remain invested in Bonds.

25. Bonds bought by cheque or debit card can only be cashed in after your payment has cleared. The time taken for payments to clear is given in the Income Bonds brochure. Instructions to cash in a Bond should be made by completing the form on the back of the certificate of investment and sending it to NS&I. In the event that an interest payment cannot be prevented from being made after the last date on which interest is earned, the amount of any overpayment will be deducted from the amount to be cashed in.

Payment

26. Payment will normally be made by direct credit to a bank account (including a National Savings Investment Account or Easy Access Savings Account) or building society account. The Director intends to use the Bankers’ Automated Clearing Service (BACS) for this purpose, but reserves the right to use a different means of electronic transfer.

27. For the purpose of determining the amount payable, the date a Bond or part of a Bond is cashed in will be taken to be the date on which, in the normal course, the requested amount would be credited to the nominated account following initiation of the electronic transfer by the Director. In the case of BACS, this is normally two banking days after the Director initiates the transfer.

28. Where the Director initiates an electronic transfer properly, neither he nor the Treasury will be liable for:
(a)  any failure or delay of the receiving bank or building society in crediting the nominated account; or
(b)  any failure or delay in any part of the electronic transfer process which is beyond the Director’s direct control,
including any failure which occurs because the specified account is incapable of receiving the electronic transfer.

29. In exceptional circumstances, and with the consent of the Director, payment can, be made by crossed warrant (like a cheque). In such cases the date a Bond or part of a Bond is cashed in will be taken to be the date on the warrant.

Joint investments

30. Where Bonds are held jointly by two individuals (or where they are held jointly by two or more trustees):
(a) the investment will be the joint property of all holders;
(b) to give any instructions relating to the Bond all holders need to sign;
(c) in the event of death of a joint Bond holder full ownership of the Bond will pass to the survivor(s) who will be entitled to operate the Bond on the same terms;
(d) if a Bond holder tells us of a dispute, NS&I may freeze the Bond until we receive written instructions from all of you. At the request of any holder we may suspend interest payments to the account you nominated on your application to invest. However, the Bond will continue to earn interest.

Children

31. Interest on a Bond held in the name of a child under 7 years of age, or by two such children jointly, will be paid into a building society or bank account (including a National Savings Investment Account or Easy Access Savings Account) in the name of the child or in the name of a person who satisfies the Director that he or she is a proper person to receive payment.

32. The Director will repay a Bond held in the name of a child under 7 years of age
to any person (on their instructions) who satisfies him that he or she is a proper person to receive payment. Normally, that person will be the parent or guardian designated on the application to invest. Once the child has reached the age of 7 years repayment will normally only be made to the child, on his or her instructions.

Transfer

33. Subject to the provisions of paragraphs 19 to 21 (inclusive), you can only transfer your Bond to someone else, or from one Customer Number to another, with the consent of the Director. The Director will, for example, normally give consent in the case of the inheritance of Bonds on the death of a holder, or to a transfer to benefit from bonus interest. The Director will not normally consent to any transfer which is by way of sale.

Guaranteed life of Bonds and redemption by the Treasury

34  You may hold your Bond for at least 10 years from the date of investment. On giving six months' notice, in accordance with paragraph 35, the Treasury may redeem your Bond on any interest payment date after this ten year period. Interest will continue to be paid under these terms and conditions until the redemption date. The Director will write to you before redemption, at your last recorded address, to tell you of the redemption date.

Notice by the Treasury

35  The Treasury will give any notice required under paragraphs 4, 5 or 34 of these terms and conditions in the London, Edinburgh and Belfast Gazettes or in any other manner which they think fit. If notice is given otherwise than in the Gazettes it will, as soon as is reasonably possible afterwards, be recorded in them.

Regulations

36. As at 1 January 2008, The National Savings Stock Register Regulations 1976 (Statutory Instrument Number 1976/2012) have been amended by the following Statutory Instruments:

Law and jurisdiction

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

38. In the event of the death of the holder of a Bond, the Director reserves the right to make any payment in respect of the Bond in accordance with the law of the place in which the Bond holder resided or, if different, was domiciled at the date of their death.

39. Subject to paragraphs 40 and 41, 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.

40. 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.

41. Paragraphs 39 and 40 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.

Income Bonds
National Savings and Investments
BLACKPOOL
FY3 9YP

1 February 2008   

PLEASE KEEP FOR REFERENCE