National Savings Income Certificates

National Savings Income Bonds

Where from? National Savings Bonds & Stock Office, Blackpool FY3 9YP (forms available through post offices)

How they work You invest a lump sum. The value of your capital can't fall and earns interest which is paid to you monthly. Withdrawals require three months' notice and must be in mulTIP - les of £4,000. If you want your money back within the first year, your rate of interest is halved. You must keep a minimum balance of £4,000 in the bond.

Minimum investment £4,000 and multiples of £4,000 after that.

Maximum investment £400,000.

Tax Interest is taxable as income but paid before any tax has been deducted.

Good for Depending on returns available elsewhere, non-taxpayers who want income and can tie up a lump sum.

Bad for Anyone who can't tie up their money for a year. Taxpayers can probably do better with a building society account.

National Savings Certificates Where from Post offices, banks.

How they work You invest a lump sum for a return which is fixed at the time you invest. Interest earned increases each year and you get the best return if you can invest fora full five years. If you cash in during the first year, you get back only what you invested.

A variation is index-linked National Savings Certificates. These are like the ordinary Certificates except that the return you get is linked to inflation measured as changes in the Retail Prices Index, plus a bonus if you keep the Certificates for five years.

Minimum investment £45

Maximum investment Ordinary Certificates - £4,000 (34th issue) plus a further £40,000 if you are re-investing the proceeds from earlier issues. Index-linked Certificates - £10,000.

Tax Tax-free.

Good for Higher rate taxpayers. Basic rate taxpayers who want a relatively safe and simple investment with a fixed lump sum return. Anyone who thinks interest rates might fall. Index-linked Certificates are good for people who think that inflation might take off.

Bad for Anyone who wants ready access to their money.

TIP - Interest is added to National Savings Certificates at the end of each complete three-month period (starting with the date on which you bought them). This continues even after the five-year fixed-return period is up. If you decide to cash in your Certificates, make sure you do so at the end of an interest period. (This does not apply to index-linked National Savings Certificates which are revalued every month.)


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National Savings Capital Bonds And Income Bonds

National Savings Capital Bonds

Where from? National Savings Bank & Capital Bond Office, Glasgow G58 1SB (forms available through post offices)

How they work You invest a lump sum for five years. The amount of your capital can't fall and earns a return which is fixed at the time you invest and which is highest if you hold the bond for the full five years. The return is poor if you withdraw your money early, and three months' notice of withdrawal is required.

Minimum investment £400. Maximum investment None.

Tax Return is taxable as income but paid without... see: National Savings Capital Bonds And Income Bonds


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