UK NS&I Index-Linked Savings Certificates (2026/27)

QWhat are NS&I Index-Linked Savings Certificates?

Government-backed savings products from National Savings + Investments that pay interest linked to inflation (RPI, the Retail Price Index). Returns: typically RPI + 0.01-0.5% (the "interest rate above inflation" varies by issue). Tax-free for all UK tax bands. Backed by HM Treasury - no FSCS limit, effectively unlimited capital protection. Fixed terms of 2, 3, or 5 years. Often referred to as "ILSCs" or "linkers".

QAre they currently available?

No - CLOSED to new savers since September 2010 due to high demand + budget constraints. Existing holders can renew their certificates at maturity (typically into new issues that are also closed to new investors). The product has been closed for 15+ years but the existing certificates continue to track RPI. Periodic media speculation that NS&I might relaunch has not materialised. As of mid-2026, no firm commitment to reopen.

QI have existing certificates - what should I do?

At maturity, you have 30 days to decide. Options: (a) Renew into a new ILSC (locks in RPI + small uplift for another 2-5 years tax-free). USUALLY THE BEST OPTION when ILSCs are otherwise closed. (b) Take the cash + reinvest elsewhere (Cash ISA, Premium Bonds, regular savings). Loses the tax-free inflation hedge. (c) Roll into other NS&I products (Premium Bonds, Income Bonds, Direct Saver). Default if you don't respond: usually re-invested in similar terms. The renewal right is valuable; don't miss the 30-day window.

QWhat are the alternatives for new savers?

Inflation hedge options: (a) Index-Linked Gilts - UK government bonds with coupons + principal indexed to RPI. Direct purchase via brokers (Hargreaves Lansdown, AJ Bell, Interactive Investor). Tradeable + tax-treated as gilts (interest income subject to tax but capital gains CGT-exempt). (b) Premium Bonds - tax-free + government-backed but not inflation-tracking; current 3.30% prize rate rises to 3.80% from the July 2026 draw onwards per NS&I, broadly positive after expected inflation. (c) Best easy-access savings + Cash ISA - track inflation imperfectly via market rates. (d) Inflation-Linked Bond ETFs - within ISA / SIPP wrapper. None match the RPI + tax-free combination of original ILSCs.

QWhat's the RPI vs CPI question?

Existing ILSCs track RPI (Retail Price Index). RPI is typically 0.5-1.5 percentage points HIGHER than CPI (Consumer Price Index) due to different formula + housing cost treatment. Government has been migrating other indexation to CPI (lower) - tax bands, benefits, pensions all uprated by CPI generally. Existing ILSC holders benefit from continued RPI link (higher returns). RPI is being formally phased out by 2030 + replaced with CPIH (CPI + Owner-Occupiers' Housing Costs); existing ILSCs are protected under terms but new issues post-2030 (if any) would likely use CPIH.

QHow tax-efficient are ILSCs?

Highly. All returns (interest + inflation adjustment + principal increase) are TAX-FREE for ALL UK tax bands. Doesn't use Personal Savings Allowance. Doesn't use ISA allowance. Doesn't count against Capital Gains Tax allowance. Particularly valuable for additional-rate taxpayers (£0 PSA + 45% tax rate on alternatives) + higher-rate taxpayers with significant savings. The closure of ILSCs to new investors removed one of the most tax-efficient + safest UK savings products. Existing holders should value the certificates accordingly.

QCould they reopen?

Possible but not promised. NS&I product launches respond to government funding needs - if the Treasury wants to raise more savings funds via NS&I, products including ILSCs might be relaunched. Recent launches (Green Savings Bonds, British Savings Bonds in 2024) show the government actively uses NS&I for specific funding objectives. Inflation-tracking products attract significant demand; reopening would likely be brief + heavily subscribed. Sign up for NS&I email alerts at nsandi.com - you'll be notified within hours of any new product launch. Move fast: previous reopenings have closed within days of demand.

QWhat about Index-Linked Gilts as an alternative?

Closest match to ILSCs for new investors. Government-backed (same protection level as NS&I). RPI-linked. Tradeable on secondary market. Available via brokers. Key differences from ILSCs: (a) Capital gains on gilts are CGT-EXEMPT (Section 115 TCGA 1992) - good. (b) Interest (coupon) is taxable as savings income subject to PSA - so within ISA / SIPP wrapper for tax-free. (c) Market price varies with interest rates + inflation expectations - capital can fluctuate before maturity. (d) Sold at market price, redeemed at par (or RPI-uplifted par). Most practical: hold within ISA / SIPP for tax-free returns. Direct purchase + tracking via free brokers (e.g. Interactive Investor for accumulation gilts).