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NS&I Launch British Savings Bonds

Gresham Wealth

The launch of NS&I’s new ‘British Savings Bonds’ is an interesting development for savers and investors alike. Announced in the Chancellor’s Spring Budget in March 2024, these first-of-their-kind bonds provide an alternative to Premium Bonds and traditional savings accounts.

In this blog post, we will explore the key features of British Savings Bonds.

What are British Savings Bonds?

British Savings Bonds are investment products offered by NS&I. Available with deposits from £500 up to £1 million, these bonds are designed to provide a safe and secure way for individuals to save their money, while also offering the potential for attractive returns. Another key feature, and how they gain their name, is the promise that savings will be invested ‘back into supporting the UK’.

There are two options – Guaranteed Growth Bonds and Guaranteed Income Bonds – which offer either a fixed rate of return after the three-year term or a fixed rate monthly income throughout the three-year term.

The interest rate offered on the Guaranteed Growth Bond from April 2024 is 4.15% gross AER, fixed for three years with interest payable at the end of its term. Withdrawals are not permitted within three years from the date of opening.
The interest rate for the Guaranteed Income Bonds is 4.07% gross / 4.15% AER with interest payable every month for the three-year term. Again, withdrawals are not permitted within three years from the date of opening.

As with all NS&I savings, every penny is 100% secure, back by HM Treasury. Due to the £1 million maximum deposit limit, it could provide a good option for those who want to save larger amounts of cash over and above the £85,000 FSCS financial protection limit that is usually available with regulated UK banking institutions.

It is important to note that unlike Premium Bonds, income from British Savings Bonds will fall into an individual’s Personal Savings Allowance. Depending on other income from savings during the tax year you receive your interest, it may therefore mean that tax is payable on earnings made from British Savings Bonds.

The launch of British Savings Bonds offers a new savings opportunity for those looking to grow their wealth in a secure manner. However, there are certain restrictions and tax consequences that will need to be carefully considered before locking away cash for the three year term.

The British Savings Bonds are not to be confused with the UK ISA – which was also announced during this years’ Spring Budget. The UK ISA will be a £5,000 allowance in addition to the existing £20,000 ISA allowance and will be a new tax-free product for people to invest in UK-focused assets. Consultation on the design and implementation of the UK ISA will be open until 6 June 2024.

Remember, before making any investment decisions, it is important to consult with a financial adviser who can provide guidance tailored to your individual needs and circumstances. To speak to a member of Gresham’s team of financial advisers, please get in touch.

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