NS&I Fixed Rate Savings Certs

jem16

Bogof_Babe wrote: »

Thanks both, I think I understand a bit better now. It's quite confusing for a novice, but I will give it serious consideration.

So could I have one of each types at the same time? I can't understand how the Gov't can afford to lose all the tax they would make if these were normal savings products.

What you really have to think about is how tax-free accounts compare with taxed accounts.

Tax-free ISAs are always best as their rates are always good - you cannot beat them.

After that you have taxed accounts. Simply work out 80% ( if a basic rate taxpayer ) or 60% ( if a higher rate taxpayer and that will give you your net rate ( after tax). The compare them with the NS&I offerings.

For example 2.9% (NS&I fixed rate) tax-free is the equivalent of 3.625 gross (basic rate) or 4.83% (higer rate). Both of these rates can be easily beaten by Icesave or Sainsbury's instant access accounts paying around 6% gross.

Bogof_Babe

I also have money in tax-applicable accounts (ING Direct and NatWest Savings Direct - I know, could do better :rolleyes: ), but as I am currently a non-taxpayer I have registered them for gross interest payments. I want to remain a non-taxpayer, so with this extra money (from an inheritance) I would be either "giving it" to my husband (along with some of the direct debits that I currently pay!) or putting it somewhere tax-free, hence the NS&I consideration.

Husband is a tax-payer anyway on his savings accounts, so gets paid net interest, but I don't want to have to get involved in claiming tax back every year as I have no other income apart from savings interest.

ManAtHome

ps - forgot about the re-investment bit. When any of your certs are approaching maturity, NS should send you a letter which allows you to re-invest in any of their current certs regardless of how much you have invested (the £15k max is the "new money" limit - bit like ISAs where you can transfer previous ones without affecting this years allowance).