National Savings - New Fixed Rate Bonds
In January 2015 (actual date to be announced), NS&I is launching new Bonds for investors aged 65 and over. These bonds were announced by the Chancellor in his March 2014 Budget Statement. Full details of the bonds will be available when they go on sale in January, but some preliminary information has been issued.
These will be lump sum investments providing capital growth, not income. There will be a one year bond and a three year bond, and it will be possible to subscribe for both issues. They should ideally be retained for the planned term but it will be possible to cash them in early with a penalty of 90 days’ interest. The return will be 2.8% gross/AER for the one year bond and 4.00% gross/AER for the three year bond. Anyone over age 65 can apply, with a minimum investment of £500 and a maximum investment per issue of £10,000. This means that a couple aged over 65 could potentially invest a total of £40,000 if they each subscribe to both issues. The interest will be added on each anniversary.
The interest is potentially taxable and will be paid net. It will not be possible for non-taxpayers to apply for gross interest payments, which means that a tax reclaim would be necessary.
There is a limit to the amount of bonds that can be offered and they will be arranged on a ‘first come first served’ basis. It is expected that demand will be high therefore those interested in these issues will need to act fast.
Other news is that the upper investment limit for Premium Bonds will be raised to £50,000 at some point during the 2015/16 tax year. Again, the actual date is yet to be announced.
If you would like any further information on this please contact Jenny Armstrong, robinson+co’s Chartered Financial Planner on 01900 603623.