NS&I Pensioner Bond Launch – Website Crashes!
The eagerly awaited pensioner bonds have finally gone on sale yesterday. The date of the actual launch was kept under wraps and the website crashing has probably vindicated this usual approach.
Market-leading rates after years of low returns on accounts meant the bonds had been expected to sell quickly. Chancellor George Osborne said 26,000 bonds have been sold by Thursday afternoon, raising £270m.
The one-year bond pays an annual interest rate of 2.8% before tax, and the three-year bonds pays 4% before tax. Interest will be added on each anniversary after investment.
Financial advisers have pointed out that the best one-year bond on the open market was currently paying 1.85% interest and the best three-year bond was paying 2.5%.
“Now that a rise in interest rates looks even less likely this year, these new bonds look attractive.”
Tax will be deducted from the interest paid on these bonds, however non-taxpayers can claim this back from HM Revenue and Customs (HMRC).
Basic rate taxpayers must declare the interest if they complete a tax return. Higher and additional rate taxpayers need to declare the interest to HMRC and pay any further tax due.
Investment is limited to £10,000 in each bond, making a maximum of £20,000 per individual.
Applications can be made by the NS&I website or phone.
Back in 2011, the popular NS&I index-linked certificates sold £5bn in four months before being closed. This year’s bonds are a different product, but we would be surprised if the £10bn allocation lasts until the new tax year in April.
We would say if you want to take advantage of the rates, take action sooner rather than later. Equally as we approaching the end of the tax year there will of course be opportunities to use ISA allowances maybe for 2014 tax year and look forward to 2015 tax year.