Cash ISA and NS index certificates at same time?

Biggles

EdGasket wrote: »

Is the interest and Index-Linking on IL savings certificates equal to RPI + 1% each annum or RPI + 1% at the end of three or five years? RPI + 1% per annum, if it is that, seems a good deal right now with inflation creeping up and many savings rates under 1%.

It's per annum.

barak

Biggles wrote: »

It's per annum.

Yes, but you don't get a flat 1% + RPI each year. You get less than 1% added the first year and more than 1% the last year. It's all on the NS&I site.

http://www.nsandi.com/products/ilsc/rates.jsp

RayWolfe

True, but the net effect is 1% compound.
The lower starting rates are to discourage early withdrawal.

EdGasket

Can I invest £15K in the 3 year Index-Linked Savings Certificates (issue 19) AND a further £15K in the 5 Year Index-Linked Savings Certificates (issue 46)? As they have different issue numbers I presume I can but the NS&I site is not totally clear about it.

Biggles

EdGasket wrote: »

Can I invest £15K in the 3 year Index-Linked Savings Certificates (issue 19) AND a further £15K in the 5 Year Index-Linked Savings Certificates (issue 46)? As they have different issue numbers I presume I can but the NS&I site is not totally clear about it.

Yes, you can invest up to £15,000 in each issue, see T&Cs.

In addition to the 3-year Issue 19 and the 5-year Issue 46 being completely separate, when Issue 20 and/or 47 come out, you can invest another £15,000 in each of the new issues.

Jonbvn

Biggles wrote: »

Yes, you can invest up to £15,000 in each issue, see T&Cs.

In addition to the 3-year Issue 19 and the 5-year Issue 46 being completely separate, when Issue 20 and/or 47 come out, you can invest another £15,000 in each of the new issues.

It even gets better. When your IL certificates mature you can roll them over into another issue, and you can also invest another £15k in the same issue. If you have a partner, they can also invest and you can hold them in trust for each other.

With all of the above options, you can see that it is possible to build a very large tax-free sum relatively quickly.

MSE_Martin

Not sure which weekly email you're reading but mine has a full run down of he product including the fact that the rate changes and has a large section explaining the negatives - and links to the article for even more info.

stphnstevey

Jonbvn wrote: »

If you have a partner, they can also invest and you can hold them in trust for each other.

How would you hold it in trust for each other?

Jonbvn

stphnstevey wrote: »

How would you hold it in trust for each other?

You have to set up a "bare trust" to do this, such that you act as the trustee and buy certificates for your partner as the beneficiary, and vice versa.

See HMRC guidance on trusts.
http://www.hmrc.gov.uk/trusts/intro/basics.htm
http://www.hmrc.gov.uk/trusts/types/bare.htm

I would suggest that a solicitor be engaged to set up the trusts.

earthlover

Are Index linked certs worth having if you're a non-taxpayer or are high rate fixed interest accounts a better option, even though to get 5% the cash would probably have to be left in for 5 years.

I have a bond that's maturing soon and wondering what's best? I have a Saga 5year fixed bond 5.10% that can be withdrawn from with 90 days loss of interest, if memory serves me.

Should I open another one or think about the NS&I index linked?