Green savings bonds, allowing savers to help finance initiatives tackling climate change, will be launched by NS&I later this year.
The bonds, announced in the 2021 Budget, will be available to buy online at nsandi.com.
They will be available at a fixed rate for a three-year term and money invested will help to finance green projects chosen by the Government.
Projects will include making transport greener, using renewable energy over fossil fuels, preventing pollution, using energy more efficiently, protecting natural resources and adapting to a changing climate.
Savers must be 16 or over to take out the bonds, with a minimum investment of £100 and a maximum limit of £100,000 per person.
Further details on NS&I’s green savings bonds, including the interest rate, will be available later in the year.
Interest will be earned daily and added once a year, and paid on maturity.
Asked by the PA news agency about people who may struggle to get online to take out the bonds, a spokesman for NS&I said: “By offering the product online only we are meeting the green sustainable values of the product.
“Our online service will give customers a simple and straightforward way to apply for and manage their investment.
“However, we recognise that some customers will not be able to invest online due to exceptional circumstances.
“If a customer thinks this applies to them, we’ll discuss their circumstances and options with them by phone.”
The interest earned will count towards the personal savings allowance in the year that the bond matures.
The tax-free allowance is up to £1,000 for basic rate taxpayers and £500 for higher rate taxpayers.
Ian Ackerley, NS&I chief executive, said: “We are delighted to be offering a new savings product on behalf of the Government and playing a key role in contributing towards the UK’s green agenda.
“This exciting new bond will be available to purchase from nsandi.com later this year and will give UK savers the opportunity to contribute towards green projects to help make the world greener, cleaner and more sustainable.”
The bonds will have a cooling-off period in the first 30 days of investment.
Customers must also have a UK bank account capable of receiving Bacs payments to qualify.
All NS&I (National Savings and Investments) products offer 100% capital security, because NS&I is backed by the Treasury.
More information is at www.nsandi.com/green.
NS&I recently released its annual report, which showed it missed its net Government financing target last year.
In 2020-21, NS&I delivered a record £23.8 billion of net financing to the Government, helping to boost state coffers to tackle the Covid-19 pandemic.
However, it undershot its revised 2020-21 target to raise £35 billion, within a £5 billion range either way of £30 billion to £40 billion.
NS&I, which has 25 million customers, announced rate cuts on its savings products last year and it said savers had moved more quickly than usual to withdraw their funds.
The provider has a responsibility to balance the interests of savers, taxpayers and the broader financial services sector and it decided to cut rates after its products had moved to the top of “best buy” savings tables.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “What really matters here is the rate, and NS&I is remaining tight-lipped on that front.”
She added: “The fact this account will be on offer from a national treasure like NS&I will appeal, as will the fact the money is 100% guaranteed, up to the maximum investment of £100,000. However, this isn’t enough to drive a blockbuster savings product: the rate needs to be competitive to draw significant savings.
“The timing may well be wrong for revealing the rate right now. Over the past few weeks, smaller banks have been competing hard at the top of the fixed rate savings tables, pushing the most competitive rates up.
“This is likely to die back as these banks fill their coffers, so NS&I may want to announce the rate at a time when it compares favourably to the best on the market.”