Savers will be
able to invest up to £15,000 tax free in a five-year bond with an interest rate of RPI plus 0.5%. On each anniversary, NS&I calculates the interest
by using RPI figures at the start and end of each year of investment. The minimum amount that can be invested is £100.
But savers will need to act fast as once the amount of money National Savings is allowed to accept is reached they will be
withdrawn. Savers need to be aware though that if they cash in the certificates within the first year that they will not get
The new five-year
savings bonds will pay interest based on the retail prices index currently 5.3% plus an average of 0.5%.
Interest paid is tax-free, making these extremely attractive to higher-rate taxpayers.
Based on inflation rates in the year to March 2011,
these bonds are currently paying an annual equivalent interest rate of 7.25% gross for a basic rate taxpayer or 9.67% for
a higher rate taxpayers.
Going forward no one knows what the RPI will be in March 2012 when the rate for the next 12
months will be set but the figures below show what various rates are worth.