NS&I 1 Year Guaranteed Growth Bonds and Guaranteed Income Bonds at 6.20%

friolento

Hmh, doesn't sound like you can save much tax - though could you add to your pensions? Have you maxed your Premium Bonds?

Swipe

CaveBird said:

I did look at opening an NS&I saver but the website says it will take 7-10 days to approve and I’m concerned the bond may go before that, particularly if they’re likely to have high volume of applications right now.

According to the ThisIsMoney podcast, NS&I had a £300M outflow in July so I don't think they'll be pulling the rate within 10 days. The other alternative is to open a Direct Saver with £1 on your debit card and then do a bank transfer to it. Double check with NS&I, but I think the money would then be available to fund the bond the next day.

Dazed_and_C0nfused

CaveBird said:

friolento said:

CaveBird said:

Thanks for the replies. The card is with Santander, I spoke to their telephone banking team to look at the card/account and they confirmed there were no limits on either. We were trying to buy the maximum allowed by Debit Card (£99,999), we received the proceeds from the sale of my late mother in laws house 6 months ago and have been holding on for a good interest rate to get it invested, it’s been sitting in a 2.5% easy access account while we hold our nerve!

I think I’ll try buying some smaller amounts, we just wanted to try and minimise the number of bonds so that we can keep track of them. We have £200,000 to invest and I’d much rather have 2 £99k bonds than 8 £25,000 to keep track of!

Could you not transfer the £200k in two Faster Payments from Santander to an NS&I Direct Saver, and then fund one of the NS&I bonds in one go from the Direct Saver?

What is your tax status, would you have to pay tax on the interest from £200k?

Yes we will have to pay tax. I’m a standard rate tax payer and husband is a high rate, we’ve already both maxed out our ISA allowance (locked away in a one year fixed rate at 5.5%). My income is only a few thousand under the 40% threshold so I’ll get to pay 20% tax on a portion of my share of the savings and the rest will be at 40%.

Our plan is to pay off our mortgage when it comes up for renewal in 2025, we’re only paying 1.48% on it now so makes sense to lock away this money in a high interest savings bond until we need it and earn some extra with the interest. If we’ve done our sums correctly we should have made about £20k in interest, after tax, between now and Oct 2025 when the mortgage rate ends.

The first £500 will be taxed at 0%.  This uses up the first £500 of any remaining basic rate band.

Or a mix of basic rate and higher rate band if you have less than £500 basic rate band available.  In which case the remainder would be taxed at 40% with none of the interest being taxed at 20%.

CaveBird

Thanks again for the advice. I’ll be honest, premium bonds hadn’t even occurred to me but looking at the numbers now I’ll definitely give it some further thought. We’re reluctant to do too much with pensions at the moment purely on the basis that the money is then “gone” for the time being and our priority is paying off the mortgage. We plan on reassessing what to do with the leftover funds once that is done. We’re fortunate that we both have a good pension provision already (both in our mid-40s) with me having started one in my early 20s and husband having a very good final salary pension from the MOD, after leaving the military a few years ago.

cwep2

CaveBird said:

Thanks for the replies. The card is with Santander, I spoke to their telephone banking team to look at the card/account and they confirmed there were no limits on either. We were trying to buy the maximum allowed by Debit Card (£99,999), we received the proceeds from the sale of my late mother in laws house 6 months ago and have been holding on for a good interest rate to get it invested, it’s been sitting in a 2.5% easy access account while we hold our nerve!

I think I’ll try buying some smaller amounts, we just wanted to try and minimise the number of bonds so that we can keep track of them. We have £200,000 to invest and I’d much rather have 2 £99k bonds than 8 £25,000 to keep track of!

I was trying to transfer a 5 figure sum of money into iWeb to put in Money Market Fund a couple of months ago from Santander select. I knew that individual transaction limit on debit card was £25k, but it stopped allowing me to put any more in after 50k. I rang up iWeb and they told me there was a debit card limit set by Mastercard of £50k per day, so nothing the bank or iWeb could do about it apart from telling me to wait until next day.

Others on this thread have said you can do £100k per day - this is definitely true for bank transfers (FPS payments) but not in my experience of Debit card payments - at least with Santander, but what I was told implied it was potentially for all.

That may be the issue you are coming up against. Maybe try 25k or 50k clips. Alternatively as suggested FPS payments to Direct Saver and then into bonds that way would allow me to do £100k per day and even just leave it earning the direct saver rate for one day then open a single bond of £200k.

friolento

cwep2 said:

 
That may be the issue you are coming up against. Maybe try 25k or 50k clips. Alternatively as suggested FPS payments to Direct Saver and then into bonds that way would allow me to do £100k per day and even just leave it earning the direct saver rate for one day then open a single bond of £200k.

"Pay by bank", as NS&I call the option to pull money into the Direct Saver, is probably even quicker than Faster Payment. I tried it the other day, with just a tenner. It took about an hour before it was credited into my Direct Saver, and was then available to xfer to other NS&I accounts.

Whether you use FP or Pay by bank, you can fall foul of Santander's fraud detection algorithms........

On balance, I would probably use Santander telephone banking, to ask them to transfer two lots of £100.000 to my NS&I direct saver - one on the day of the call, and one the day after. I would previously have set up and tested a payee for these payments. I have made this kind of transfers before from Santander. They still quiz you to death about the purpose of the payments, and their process involves 2 steps: in step 1 you instruct them to pay, in step 2 they call you back within a couple of hours to re-check you really do want to make the payment before they then release it. Once the money is all in the Direct Saver, it should be easy to fund the GGB with it.

Santander Branch and SO limit is also £100k a day, so these might be other viable options.

CaveBird

Thanks again everyone, we’ve opted to go with smaller transactions so have just done 2x £25k (one on my debit card, one on my husbands) which both went through. Tried to do it again and transaction declined, so we’ll just repeat the process tomorrow and in the meantime open up an NS&I Saver and keep a few £ in there so that it is available when/if we want to buy more bonds.

We’re probably going to look at maxing out our premium bonds too (both of us have less than £100) so thanks again for that suggestion.

curlywig73

Albermarle said:

curlywig73 said:

Is it worth withdrawing money (25k) from a low interest Virgin cash ISA to put into the new NS&I bond for the much better rate, thus losing the tax free status of that money for ever?  I was going to transfer it to my Vanguard ISA but it has been a bit volatile this year and the NS&I bond seems a safer bet for a year in terms of growth.  The tax free status is useful to me as I do go over the PSA each year and likely will for the next few years.  Trying to work out whether it's worth paying the extra tax on the higher NS&I interest or it would be better to preserve its tax free status and put it in my Vanguard ISA but with the risk that it performs poorly this coming year. It's hard to know what to do for the best long term when interest rates start changing as much as this.  Vanguard ISA was a no-brainer when interest rates were 1%.

Why not just transfer it to a one year fixed rate with another provider. You can get around 5.6% tax free which works out better than 6.2% minus 20% .

because my ISA allowance for this year has already been in a S&S account.  I can't open a new cash ISA this year.  May consider it next year, if rates are good.

baz8755

I want to transfer my PB to the GIB and was wondering if the online application process will allow this, if not how do I achieve this.

Also I am guessing a GIB of £50k will give me a monthly income of £250 via DD, no tax as I have no other taxable income

NedS

Dazed_and_C0nfused said:

CaveBird said:

friolento said:

CaveBird said:

Thanks for the replies. The card is with Santander, I spoke to their telephone banking team to look at the card/account and they confirmed there were no limits on either. We were trying to buy the maximum allowed by Debit Card (£99,999), we received the proceeds from the sale of my late mother in laws house 6 months ago and have been holding on for a good interest rate to get it invested, it’s been sitting in a 2.5% easy access account while we hold our nerve!

I think I’ll try buying some smaller amounts, we just wanted to try and minimise the number of bonds so that we can keep track of them. We have £200,000 to invest and I’d much rather have 2 £99k bonds than 8 £25,000 to keep track of!

Could you not transfer the £200k in two Faster Payments from Santander to an NS&I Direct Saver, and then fund one of the NS&I bonds in one go from the Direct Saver?

What is your tax status, would you have to pay tax on the interest from £200k?

Yes we will have to pay tax. I’m a standard rate tax payer and husband is a high rate, we’ve already both maxed out our ISA allowance (locked away in a one year fixed rate at 5.5%). My income is only a few thousand under the 40% threshold so I’ll get to pay 20% tax on a portion of my share of the savings and the rest will be at 40%.

Our plan is to pay off our mortgage when it comes up for renewal in 2025, we’re only paying 1.48% on it now so makes sense to lock away this money in a high interest savings bond until we need it and earn some extra with the interest. If we’ve done our sums correctly we should have made about £20k in interest, after tax, between now and Oct 2025 when the mortgage rate ends.

The first £500 will be taxed at 0%.  This uses up the first £500 of any remaining basic rate band.

Or a mix of basic rate and higher rate band if you have less than £500 basic rate band available.  In which case the remainder would be taxed at 40% with none of the interest being taxed at 20%.

@CaveBird you may be better off considering a low coupon government gilt which will yield 4.84% net for a 40% tax payer, as opposed to this which will only net you a yield of around 3.72% after 40% tax.

https://www.yieldgimp.com/gilt-yields