NS&I index linked savings certificates

tmn0004676

Hi

Please can someone help me with a query.

If you roll over an index linked saving certificate does it pay interest on the interest.


I presumed it did but now I am not so sure because it is showing the same purchase price as it did when I first took out the certificate

thanks

Lansdowne

Yes you do get interest on the interest, and interest on the index-linking, as well as index-linking on the index-linking and index-linking on the interest.

But they do seem to quote the original purchase price, however many years ago it was, then quote the total index-linking and total interest gained since then.

le_loup

I have one in front of me now. The renewal letter shows the value at the anniversary which includes interest and indexing.

s20544

On a connected topic.....

I know that interest on ILSCs is calculated/locked-in annually but I believe the interest is only actually paid at maturity.

When my NS&I certificates mature I may find myself to be German tax resident rather than UK tax resident. This would mean that when maturity interest is paid I would have to declare this interest on my German tax return and have German income tax deducted. (The tax free status of ILSCs is only applicable to UK).

If I roll-over the certificates does this mean that I can postpone the payment of the interest . . . . (perhaps until a time when I regain my UK tax residency and can therfore benefit from the interest being paid tax-free)?

kidmugsy

The interest and index-linking are effectively being capitalised as they accumulate each year - but it seems unlikely that German tax law would recognise such a concept involving a UK government savings scheme.

Could you not just cash your certificates in before you leave for Germany?

s20544

Non-resident UK citizens are eligible for NS&I certifcates according to the terms and conditions. I want to keep the certificates as long as possible, even if I become German tax resident. I prefer to keep the certificates until I need the cash becasue few other savings accounts can match the rate that they offer . . . as long as I can avoid having to pay tax on the interest.

I believe that liability for income tax in both Germany and UK is only triggered at the specific time when interest is actually paid.

If an NS&I index linked saving certificate is rolled-over at the end of it's term, is interest paid when the first certificate matures (i.e. immediately before roll-over), or is it paid when the new roll-over certificate matures?

kidmugsy

s20544 wrote: »

...I prefer to keep the certificates ... becasue few other savings accounts can match the rate that they offer . . . FAIR enough
...

If an NS&I index linked saving certificate is rolled-over at the end of it's term, is interest paid when the first certificate matures (i.e. immediately before roll-over), or is it paid when the new roll-over certificate matures?

I don't know the answer but: consider ILSCs held in a discretionary trust. During the accumulation period of the trust, the interest and index-linking are treated as being capitalised and are therefore not taxed. Once the accumulation period is over both are treated as income and therefore taxed. So if you can find out how the timing is treated in that case, you may have your answer.

delwboy

Are there still any bonds linked to house prices available?

bigfreddiel

well my rolled over certs show their new value - done nicely since 2007 - showing a nice little tax free gain in the last five years and as inflation is increasing i'm glad to keep them for the forseeable future,

fj

barak

s20544 wrote: »

.....If an NS&I index linked saving certificate is rolled-over at the end of it's term, is interest paid when the first certificate matures (i.e. immediately before roll-over), or is it paid when the new roll-over certificate matures?

Surely the answer is that at maturity the amount available for either withdrawal or rolling-over is the same, so interest has already been credited. I can't see any way that it could be delayed.

zippy1973

Mine are due to mature in February. Do you get the same deal if you roll them over for another term? Think I'm getting inflation rate plus 1% ontop