Issued by the UK government's National Savings department. These are certificates which are held for five years by an investor before being redeemed. No interest is paid over the five years. On redemption, all the proceeds are free of tax. If the certificates are redeemed early, the proceeds are tax free, but the effective interest rate achieved is fairly low. If the certificates are not redeemed after five years, they continue to accrue tax free interest but again at a fairly low rate of interest (referred to as the general extension rate). Dresdner Kleinwort Wasserstein financial glossary
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A range of tax-free investments from the government that pay a guaranteed return. An attractive investment for taxpayers, especially those paying at the higher level.
Financial and business terms. 2012.