Our range / Index-linked Savings Certificates /

How they work

With our inflation-beating savings, you’ll have the peace of mind of knowing that the value of your savings will stay ahead of rising prices.

After you invest in Index-linked Savings Certificates, they increase in value each year in line with inflation, as measured by the Retail Prices Index (RPI) – we call this index-linking. We also add extra interest on top at fixed rates. The index-linking and extra interest together mean your savings are guaranteed to grow ahead of the rate of inflation, provided they are held for at least a year.

• Tax-free returns
• How much can I invest tax-free?
• 100% security
• Choice of investment terms
• What is an Issue? 
• Do new Issues affect any I already have?
• Who can invest?
• Investing in trust
• Investing for children
• Cheque and debit card clearance
• What if I need my money before the end of the term?
• What happens at the end of the term?
• About the terms and conditions
• Protecting your personal information
• Our commitment to good service

Tax-free returns

As well as keeping the value of your savings ahead of rising prices, every penny you get back from your inflation-beating savings is tax-free. This means you don’t have to pay any UK Income Tax or Capital Gains Tax on your investment returns.

You can invest tax-free in Index-linked Savings Certificates even if you already have an ISA, a PEP or any other tax-free investment. And you don’t even need to declare Savings Certificates on your tax return.

Because all the returns are yours to keep, the equivalent gross return is higher. To match a tax-free return of, say, 4% a year, a basic rate taxpayer would need to earn 5% before tax. And the same tax-free return would be worth 6.67% if you pay tax at the higher rate (based on current tax rates). So you can see the advantages of investing tax-free.

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How much can I invest tax-free?

From as little as £100 up to £15,000 in each Issue of each term. Unlike ISAs, Index-Linked Savings Certificates aren’t tied to the tax year. You can invest up to another £15,000 tax-free whenever a new Issue goes on sale – and we normally release several new Issues a year.

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100% security

National Savings and Investments is backed by HM Treasury, so any money you invest in Index-linked Savings Certificates is 100% secure.

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Choice of investment terms

Index-linked Savings Certificates are lump sum investments designed to be held for a set time called a “term”. Currently you can choose either a 3-year or a 5-year term. Or you can invest in both.

The rates of interest you’ll earn on top of inflation are fixed and guaranteed for the whole term. These fixed rates increase each year, so you’ll get the best return for your money if you keep your Certificates for the full term. If you do need your money earlier you can cash in your Certificates at any time. But you need to hold them for at least a year to benefit from index-linking and extra interest.

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What is an Issue?

We sell Index-linked Savings Certificates in Issues, each of which has its own number (for example Issue 23). Whenever there are new guaranteed rates on offer, we release a new Issue.

Each time a new Issue goes on sale, you can invest up to another £15,000 tax-free – and we normally release several new Issues a year, for both the 3-year and 5-year terms.

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Do new Issues affect any I already have?

No – any Index-linked Savings Certificates you already have will still earn index-linking and extra interest at the rates guaranteed when you invested.

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Who can invest?

Anyone aged seven or over. You can invest by yourself or jointly with someone else.

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Investing in trust

If you want to invest in trust for someone else then you’ll need to apply by post using a special form – see Other ways to apply.

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Investing for children

You can buy Savings Certificates on behalf of children under seven. The child then becomes responsible for them on their seventh birthday. See Other ways to apply.

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Cheque and debit card clearance

If you buy your Certificate by cheque or debit card, your payment will be cleared on the 7th working day (ie excluding weekends and English bank holidays). Certificates can only be cashed in after your payment has cleared.
 
For example, if we receive your cheque or debit card details on a Monday, your payment will be cleared on the Tuesday of the following week. Allow one additional day for each English bank holiday.

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What if I need my money before the end of the term?

To get the maximum return from your investment, you need to keep your Savings Certificates for the full term. This is because the guaranteed rates of extra interest increase each year during the term. But if you do need to take money out earlier, it’s no problem – you can cash in Savings Certificates whenever you like. Any returns you earn are still tax-free. Savings Certificates cashed in within the first year of investing don’t earn any index-linking or extra-interest, so it’s best to keep them for at least a year. If you cash in your Certificates any time after the first year, you will earn index-linking and extra interest for each complete month you’ve held them. To cash in, ask for a form at a Post Office ® branch or contact us and we’ll send you one. To cash in a Certificate held jointly, both investors need to sign the form.

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What happens at the end of the term?

We’ll write to you shortly before your Savings Certificate reaches the end of its term, to let you know your options.

You can then choose to:

If you want to continue your investment for another term of the same length, you don’t need to do anything. We’ll arrange it for you automatically. Or if you’d prefer to reinvest in a different term or type of Savings Certificate, all you have to do is contact us – there’s no complicated paperwork.

If at the end of the term you continue your investment:

If you don’t manage to reply to us by the end of the term, don’t worry – you will carry on earning index-linking and extra interest at the rate on offer at the time.

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About the terms and conditions

Please read the terms and conditions before you invest. If we make any changes to the terms and conditions after you invest, we will let you know. If any change is to your disadvantage, we will let you know personally at least 30 days before the change. In this case you can switch to another product or cash in your Certificate, without notice or penalty, within 60 days of us telling you. For any other changes we will let customers know by putting a notice on our website.

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Protecting your personal information

When you become a customer of ours, we will treat all the personal information we hold about you as private and confidential. Click here for details on our privacy policy.

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Our commitment to good service

As part of our commitment to providing you with a high standard of service, we subscribe to the Banking Code. If we make a mistake we’ll aim to put things right quickly and without fuss. And if you have a complaint, we have a procedure designed to resolve it fairly. We are also covered by the Financial Ombudsman Service. Click here to find out more about the Banking Code or our complaints procedure.

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