NS&I Index Linked Tax free savings

austinrodeo

I've read Martin's article on NS&I Premium Bonds, but was wondering if NS&I Index Linked savings were any good (currently inflation + 1.15% for 3 years) giving a return of 4.85% tax free.

I'm a higher rate tax payer so based on my calculations these seem better than putting my money in a fixed rate bond such as Anglo Irish's 5.85%

FYI - I've already filled my cash ISA for this year and also have £3k in a Funds ISA

ReportInvestor

A good decision IMHO if you can afford to tie up the money.

They are usually a good deal for higher rate taxpayers, and getting in at the start of a period where there are inflation concerns adds to the attraction.

If you got 4.85% (optimistic over the whole term?) then that would = over 8% gross for a higher rate taxpayer.

The RPI has gone up by 1.5 points over the last 11 months.

david78

Yes, these are a good option for HRT payers. You need to keep them for the full term (3y or 5y) to get all the interest. One strategy is to invest smaller amounts regularly -- say a few hundred pounds every 6 months.

These can then be encashed later to provide a regular tax free income.