Consumer: Pensioner bonds buzz has sting in tail

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Some £10billion-worth of market-leading ‘pensioner bonds’ were snapped up by 825,000 customers in the first eight weeks that the bonds went on sale through Treasury-backed body NS&I.

The 65-plus Guaranteed Growth Bonds will close for sale on Friday May 15.

But other reports suggest pensioners who rushed to take out the bonds may be taxed on any interest earned, following changes to the tax laws.

Confusion had arisen after the Government announced changes to 20 per cent savings tax in the Budget in March.

Information on the National Savings & Investments website still indicates interest on the bonds is taxable but it has now confirmed it may not be for bonds opened after the turn of the tax year.

The bonds were first announced in March 2014. Rates are 2.8 per cent on the one-year bond and 4 per cent on the three-year bond, with a cap of £10,000 in each bond or £40,000 per couple for all four.