Beat tax and inflation with a top rate savings account

Beat tax and inflation with a top rate savings account

15:53 PM, 12th May 2011, About 13 years ago

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Money dropping into a piggybankInflation busting savings, with tax-free bonus boosting investment returns, are back for business with National Savings and Investments (NS&I).

The government backed savings accounts threaten to beat most other investments as they are linked to the Retail Price Index (RPI), which is currently running above the Consumer Price Index (CPI), the measure for most other inflation-linked pensions, savings and investments.

The NS&I accounts are free from income tax and capital gains tax for all savers.

A new five-year index linked savings certificate pays RPI plus 0.5% AER – RPI currently stands at 5.3%, while CPI is 4.0%. Both figures are adjusted monthly.

NS&I has also launched a five-year fixed interest savings certificate paying 2.25% AER.

Investors can save between £100 and £15,000 per issue – but must not touch their savings for a year as no interest or indexation is added in the first 12 months.

The accounts are topped up on every 12 month anniversary after the start date.

Jane Platt, Chief Executive of NS&I, said:  “Our aim is to keep savings certificates on sale for a sustained period of time and to enable as many savers as possible who wish to invest to do so. With this in mind we will be offering a 5-year term, only available direct from NS&I.

“We understand fully that we will see very high demand for index-linked savings certificates.  For those who want to invest the easiest and quickest way is to visit our web site.”

The new release of certificates has been warmly received by financial advisers and financial comparison sites.

“Unlike most bonds of this nature, NS&I’s product is tax-free, giving customers a much need boost to their savings,” said a spokesman for

“Savings certificates represent a long term commitment so are only appropriate for those comfortable locking their money away for the five year term. It’s also worth noting that the interest rate, based on RPI figures, is calculated on an annual rather than a monthly basis, meaning if inflation should fall unexpectedly during the year, customers could be stuck with a less than competitive rate.

More information – visit the NS&I web site

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