Thousands of NS&I savers have been offered the chance to cash in their fixed-rate bonds early, penalty-free.
Treasury-backed NS&I had to write to savers after failing to tell them changes to the terms and conditions of its Guaranteed Growth Bonds in 2019 could mean a big tax bill.
The bonds are no longer on general sale, but those who already hold them can roll them over into a new bond running for between one and five years.
Muddle: NS&I admits it could have been clearer in explaining the bonds tax treatment
Before May 2019 savers could access their money early if they paid a fee equivalent to 90 days interest. Any tax owed on interest added to their accounts would be paid each year. But a rule change two years ago meant savers buying or renewing their bonds could no longer access their money early altering when the interest is taxed.
With the change to tax on interest mentioned in your article last week I think that I may exceed the £1,000 Personal Savings Allowance.
I have a state pension and two small company pensions which total approximately £11,000, plus I have NS&I Guaranteed Growth Bonds and other savings on which interest may total over £1,000, causing me to potentially incur tax.
This hasn t been a concern before as some money was in Isas but as rates have dropped I have moved to other savings accounts.
As my income is below the Personal Tax Allowance of £12,570, will the balance of this be offset against my interest, and do I owe any money? – P.T., via email
NS&I altered the tax treatment of Guaranteed Growth Bonds in May 2019
The first multi-year bonds are now maturing for savers
All interest is now paid in the year bonds mature rather than each year
This could leave savers with bigger pots breaching their £1,000 Personal Savings Allowance and mean they face a tax bill
Will this hit you? Get in touch: george.nixon@thisismoney.co.uk
‘NS&I lost my mother’s £10k pensioner bond’
Has a company treated you unfairly? Our consumer champion, Katie Morley, is here to help
31 January 2021 • 5:00am
Has a company treated you unfairly? Our consumer champion, Katie Morley, is here to help. For how to contact her click here.
Dear Katie,
I am hoping you might be able to help my elderly mother, for whom I have power of attorney. She took out two investments with National Savings & Investments back in 2015, which were called “65+ Guaranteed Growth Bonds”. Both investments were for £10,000. The issue is that apparently there is no trace of one of the investments.