New National Savings Bonds Announced
The Chancellor has confirmed that National Savings & Investments (NS&I) will offer two fixed rate deposit bonds from next month for anyone over the age of 65.
The intention to offer these bonds was announced earlier this year, but to date no further details were available. George Osborne has now announced that there will be two bonds available, for terms of 1 or 3 years, and a maximum investment of £10,000 per person, per bond. (The minimum investment is £500 per bond). This therefore gives the opportunity for a couple to invest up to £40,000 in total.
The interest rates are highly competitive against the market at present, offering 2.80% over 1-year and 4.00% over 3-years. Both rates are quoted gross and the interest will be paid with Basic Rate tax (of 20%) deducted at source. This means that a Basic Rate taxpayer would receive 2.24% and 3.20% over 1 and 3 years respectively, and a Higher Rate taxpayer the equivalent of 1.68% and 2.4%. Non taxpayers or those liable to the new 0% rate (effective from April 2015) will be able to reclaim the tax paid.
In the absence of National Savings Certificates (no new issues of which are currently available) these new bonds offer a good returning the current market, without having to tie your money up for a prolonged period. Cash returns remain poor, and our estimate is that they are likely to remain so for the foreseeable future.
No investment is without risk, not even cash deposits. Other investment options are available which could potentially generate higher returns, although all of these will carry some degree of risk. The important thing is to ensure you understand what the risks are before investing, as these may not always be obvious.
If you either need or want to generate a higher return than these bonds offer, or you have a larger lump sum to consider, we can help you find the best way of investing whilst minimising any risk. For a free initial consultation in any of our offices please contact us using the details below.
Financial Planning Manager
Gareth Tregidon is manager of Bevan & Buckland’s Financial Planning Department, which operates from the firm’s Swansea, Pembroke and Haverfordwest offices. The department provides fee-based advice to personal and business clients, both from within the firm and elsewhere.
Gareth is a Certified Financial PlannerCM and an accredited Later Life Adviser with the Society of Later Life Advisers (SOLLA). He is former Chairman of the Institute of Financial Planning in South Wales, and an assessor for the internationally recognised Certified Financial PlannerCM licence.
Bevan & Buckland Chartered Accountants Swansea Tel: 01792 410100
Bevan & Buckland Chartered Accountants Haverfordwest Tel: 01437 760666
Bevan & Buckland Chartered Accountants Pembroke Tel: 01646 682383
Bevan & Buckland Chartered Accountants Carmarthen Tel: 01267 233115
Bevan & Buckland Chartered Accountants St David’s Tel: 01437 720352