NS&I over 65’s Bonds
£10,000 over 1 year at 2.80% pays £224 interest (after 20% tax £56 deducted)
£10,000 over 3 years at 4.00% pays £991 interest (after 20% tax £257 deducted)
Note: If you opt for 3 year bond and withdraw after 1 year you lose 90 days interest, but your equivalent rate after the 90 day penalty is equal to 3.01%
1 Year Virgin Money 1.70% AER– for £10,000 pays £170.00 interest (no tax to pay)
3 Years Virgin Money 2.15% AER– for £10,000 pays £659 interest (no tax to pay)
Best Savings Bonds
1 Year ICICI Bank 1.85% AER pays £148 interest (after 20% tax £37 deducted)
3 Years Secure Trust 2.51% AER pays £610 interest (after tax £160 deducted)
Telephone NS&I on 0500 500 000
Write to NS&I, Glasgow, G58 1AD
A bugbear for non taxpayers is that the NS&I Bonds are paid net of basic rate tax and because it isn’t part of the R85 scheme it means that pensioners who don’t pay tax will have to go through the rigmarole of claiming the taxed element back from HMRC.
However the crux of the issue for savers is that banks and building societies have little appetite for savings balances and with base rate not predicted to rise until 2016 there will be a big demand from over 65’s for the attractively priced NS&I bonds.