National Savings & Investments (NS&I)
What are National Savings & Investments?
National Savings and Investments are the government’s answer to the world of banks and building societies.
They are a range of savings accounts and investments that are offered by the government directly to the public, usually via the Post Office.
Founded in 1861 the deposits made by savers into National Savings & Investments accounts are used to fund the government's deficit between what they spend and what they earn (from taxes).
There are a number of different accounts that have wide ranging features you are unlikely to find anywhere else. For example, tax-free fixed interest and index-linked certificates, or premium bonds are highly unlikely to be offered by any other institution.
Saving your money with the government carries the added benefit of knowing they won’t go out of business. All deposits made via NS&I are backed by HM Treasury so are 100% secure, regardless of how much you deposit.
In practice many of the accounts can be beaten by a lot of the banks and building societies. However the tax-free accounts can be a good home for your money, particularly if you are a higher rate taxpayer.
Tax free National Savings & Investments...
Direct ISA - generally pays a competitive rate and can be managed by phone or online.
Premium Bonds - the maximum investment is £30,000 per individual and prizes are drawn each month. First prize is £1m and there are a number of smaller prizes that can be won.
Fixed-Interest Savings Certificates - there is a 2-year and 5-year issue currently on offer. The maximum investment is £15,000 per issue. Interest rates are guaranteed and can be very competitive for higher rate taxpayers who would normally save in a bank or building society account that is liable to income tax.
Index-Linked Savings Certificates - there is a 3-year and 5-year issue currently on offer. Although the rates are relatively low, they are linked to inflation and of course the returns are tax free. Again the maximum investment is £15,000 per issue.
Childrens Bonus Bonds - these are tax free for children up to the age of 21 even if they become a taxpayer. The minimum investment is £25 and the maximum invetsment is £3,000 per child, per issue.
Other National Savings & Investments...
Guaranteed Growth Bonds - these offer a competitive rate of return and currently offer 1, 2, 3, and 5-year issues. Basic rate tax is deducted at source just like from a normal bank account. As the name suggests the rates are guaranteed and the maximum investment is £1m.
Guaranteed Income Bonds - these also pay a competitive rate of return and are available in 1, 2, 3, and 5-year issues. Again the maximum investment is £1m and access to the account can be made via post, phone or online.
Investment Account - this is the equivalent of an old style current account. It uses a passbook as the main access method and pays interest rates comparable to other high street current accounts. However the interest is paid gross, although is taxable, and so would need to be declared.
Easy Access Savings Account - again this is a fairly straightforward and basic savings account service with generally uncompetitive interest rates that can easily be beaten by high street banks.
More information about National Savings & Investments, and the latest rates can be found on www.nsandi.com
