Premium Bonds
Premium Bonds: How They Work, Odds, Prizes & Tax
A practical UK guide to Premium Bonds, including the latest prize rate, odds of winning, tax treatment, £50,000 maximum holding and whether Premium Bonds could be worth considering.
Premium Bonds are government-backed savings from NS&I. Instead of earning interest, every £1 Bond enters a monthly prize draw with tax-free prizes from £25 to £1 million.
Premium Bonds offer tax-free monthly prizes rather than guaranteed savings interest.
Premium Bonds: the quick answer
Premium Bonds are a government-backed savings product from National Savings & Investments (NS&I). Instead of receiving interest, every £1 you hold is entered into a monthly prize draw with tax-free prizes ranging from £25 to £1 million.
From the September 2026 draw, the Premium Bonds annual prize fund rate is 4.35% and the odds of each £1 Bond winning a prize are 21,000 to 1 each month. The rate is not guaranteed interest: your actual return depends entirely on the prizes you win.
What are Premium Bonds?
Premium Bonds are savings bonds issued by National Savings & Investments (NS&I), which is backed by HM Treasury. They have been available in the UK since 1956 and are now held by more than 22 million people.
Unlike an ordinary savings account, Premium Bonds do not pay interest. Instead, NS&I puts money into a monthly prize fund. Every £1 Bond you own has an equal chance of being selected in the monthly draw.
Your money remains yours
The capital you put into Premium Bonds does not fluctuate with investment markets. NS&I is backed by HM Treasury, giving Premium Bonds a different form of protection from ordinary bank savings accounts.
You could win tax-free prizes
Instead of interest, your Bonds enter monthly draws. Prizes currently range from £25 to £1 million, and all Premium Bond prizes are tax-free in the UK.
How do Premium Bonds work?
You can invest between £25 and £50,000. Each £1 invested creates one Bond number, so somebody holding £10,000 has 10,000 individual £1 Bond entries in each eligible monthly draw.
| Feature | Premium Bonds |
|---|---|
| Provider | National Savings & Investments (NS&I) |
| Minimum purchase | £25 |
| Maximum holding | £50,000 per person |
| Interest | None |
| Prize fund rate | 4.35% from September 2026 draw |
| Monthly odds | 21,000 to 1 for each £1 Bond |
| Prize range | £25 to £1 million |
| UK tax on prizes | None |
| Access to money | Withdraw without notice or penalty |
| Capital protection | 100% backed by HM Treasury |
When do new Premium Bonds enter the draw?
New Premium Bonds normally need to be held for a full month before they become eligible for a prize draw.
For example, Bonds bought at any point during November would normally become eligible for the January draw. This waiting period is worth remembering when comparing Premium Bonds with an interest-paying savings account, because your money does not immediately have the chance of generating a return.
Premium Bonds calculator
Use our calculator to estimate the theoretical annual prize value and your probability of winning at least one prize based on the current published Premium Bonds odds.
*This calculator is illustrative only. The prize fund rate is an average across the entire Premium Bonds prize fund and is not the return an individual holder should expect to receive. Actual winnings may be higher, lower or zero. The probability calculation estimates the chance of one or more winning Bond numbers and does not predict prize values.
What are the odds of winning Premium Bonds?
From the September 2026 draw, NS&I publishes odds of 21,000 to 1 for each £1 Bond in each monthly draw.
That does not mean that someone holding £21,000 is guaranteed to win every month. Each Bond number is entered independently into the draw, so there is always a possibility of winning several prizes — or nothing at all.
Does holding more Premium Bonds increase your chance of winning?
Yes. Because every £1 represents another Bond number, having more Premium Bonds gives you more entries into each draw. It does not, however, change the odds attached to each individual £1 Bond.
How much could £50,000 in Premium Bonds win?
£50,000 is the current maximum Premium Bonds holding. At a 4.35% prize fund rate, multiplying £50,000 by 4.35% gives a theoretical annual prize value of £2,175.
This is not £2,175 of guaranteed income. The 4.35% prize fund rate applies across the Premium Bonds prize fund as a whole. An individual with £50,000 could win considerably more, considerably less, or potentially nothing during a particular period.
| Holding | 4.35% theoretical annual value* | Guaranteed? |
|---|---|---|
| £1,000 | £43.50 | No |
| £5,000 | £217.50 | No |
| £10,000 | £435 | No |
| £25,000 | £1,087.50 | No |
| £50,000 | £2,175 | No |
*Simple illustration using the September 2026 prize fund rate. It does not represent a forecast of an individual's winnings.
Are Premium Bonds tax-free?
Yes. Premium Bond prizes are tax-free in the UK. You do not pay UK Income Tax or Capital Gains Tax on prizes, regardless of whether you are a basic-rate, higher-rate or additional-rate taxpayer.
Premium Bond prizes also do not use your Personal Savings Allowance. This can make their tax treatment particularly relevant when comparing them with taxable savings accounts.
You would not normally include Premium Bond prizes as taxable income on a UK Self Assessment tax return.
What does the Premium Bonds prize fund rate mean?
The prize fund rate is often misunderstood. It is not an interest rate paid to every saver.
Instead, it determines the overall amount NS&I allocates to prizes across eligible Premium Bonds. Some holders will achieve a return above the headline rate, some below it, and some may receive no return at all.
This makes comparisons with savings accounts important. A savings account paying 4.35% AER would normally pay interest according to its terms. Premium Bonds with a 4.35% prize fund rate do not guarantee a 4.35% return.
What Premium Bond prizes can you win?
Premium Bond prizes currently range from £25 to £1 million. The majority of winning Bond numbers receive lower-value prizes, while the largest prizes are necessarily much rarer.
| Prize bands | Current prize values include |
|---|---|
| Jackpot | £1,000,000 |
| Higher value | £100,000, £50,000, £25,000, £10,000 and £5,000 |
| Medium value | £1,000 and £500 |
| Lower value | £100, £50 and £25 |
How do you buy Premium Bonds?
Premium Bonds are bought directly through NS&I rather than through an accountant, bank investment platform or stockbroker.
Adults aged 16 or over can buy Premium Bonds for themselves. Premium Bonds can also be bought for children under 16, with the Bonds managed by a responsible adult until the child reaches 16.
You can currently invest from £25 up to a maximum total holding of £50,000 per person.
Can Premium Bonds be held jointly?
No. Premium Bonds are held in an individual's name rather than as a joint investment. This means a couple can each have their own Premium Bonds holding of up to £50,000, potentially giving them combined holdings of £100,000, but each person's Bonds remain separately owned.
Can you withdraw Premium Bonds at any time?
Yes. Premium Bonds do not have a fixed investment term. You can cash in some or all of your Bonds without an early-withdrawal penalty.
NS&I states that withdrawals will normally take around 3–5 days to reach your nominated bank account, although processing can sometimes take longer.
How do you check for unclaimed Premium Bond prizes?
Premium Bond prizes can remain unclaimed when NS&I does not have a holder's current details. NS&I reported in August 2026 that there were more than 2.8 million unclaimed prizes worth over £125 million.
Old prizes do not simply disappear. You can use the official NS&I Prize Checker using your holder's number to check whether you have an unclaimed prize.
Keeping your address, email, mobile number and nominated bank details updated can help prevent future prizes becoming unclaimed.
Premium Bonds vs savings accounts and Cash ISAs
| Feature | Premium Bonds | Easy-access savings | Cash ISA |
|---|---|---|---|
| Return | Prize based | Interest | Interest |
| Return guaranteed? | No | Rate applies subject to account terms | Rate applies subject to account terms |
| UK tax | Prizes tax-free | Interest potentially taxable | Interest tax-free |
| Large jackpot possible? | Yes | No | No |
| Access | Flexible | Usually flexible | Depends on ISA |
| Capital protection | HM Treasury backed | Usually FSCS subject to eligibility/limits | Usually FSCS subject to eligibility/limits |
Advantages and disadvantages of Premium Bonds
✓ Potential advantages
- 100% backed by HM Treasury.
- All UK prizes are tax-free.
- Chance of winning up to £1 million.
- No fixed investment period.
- Money can be withdrawn without penalty.
- Prizes do not use your Personal Savings Allowance.
- Useful diversification from ordinary savings accounts.
Things to consider
- No guaranteed interest or return.
- You could win nothing for a prolonged period.
- Inflation can reduce the real value of your capital.
- New Bonds must wait before entering their first draw.
- The prize fund rate and odds can change.
- A conventional savings account may provide a more predictable return.
Are Premium Bonds worth it?
Whether Premium Bonds are worthwhile depends on what you want from your savings. They combine capital security, flexible access and tax-free prizes, but they do not provide a guaranteed return.
They may therefore appeal to savers who value security and flexibility and are comfortable exchanging guaranteed interest for the possibility of winning prizes.
The tax-free treatment can also become more relevant for people who would otherwise pay tax on savings interest, although a comparison should also consider Cash ISAs and other tax-efficient savings options.
If you require a predictable return, Premium Bonds work very differently from a conventional savings account or fixed-rate savings bond.
Premium Bonds for higher-rate taxpayers
Premium Bond prizes are tax-free regardless of your UK Income Tax rate. Consequently, the headline rate on a taxable savings account should not always be compared directly with the Premium Bonds prize fund rate.
A higher or additional-rate taxpayer who has already used their available Personal Savings Allowance may pay tax on savings interest, whereas Premium Bond prizes remain tax-free.
However, this does not automatically make Premium Bonds the better financial choice because the prize fund rate is not a guaranteed personal return. Your individual circumstances, available savings rates, ISA capacity and need for certainty should all be considered.
What happens to Premium Bonds when someone dies?
Premium Bonds form part of the deceased person's estate. The Bonds cannot simply be transferred into another person's Premium Bonds account.
NS&I has specific procedures for dealing with a deceased holder's investments. Premium Bonds may normally remain eligible for prize draws for a limited period after death while the estate is administered, subject to NS&I's current rules.
The value of the Premium Bonds can also be relevant when calculating the estate for Inheritance Tax. The fact that Premium Bond prizes are free of Income Tax and Capital Gains Tax does not make the underlying holding exempt from Inheritance Tax.
Premium Bonds FAQs
What are Premium Bonds?
Premium Bonds are an NS&I savings product where each £1 held is entered into a monthly prize draw instead of earning conventional interest.
What is the Premium Bonds prize fund rate in 2026?
From the September 2026 draw, the annual Premium Bonds prize fund rate is 4.35%. It is variable and is not a guaranteed personal rate of return.
What are the Premium Bonds odds?
From the September 2026 draw, the published odds are 21,000 to 1 for each £1 Bond in each monthly prize draw.
What is the maximum Premium Bonds holding?
The current maximum holding is £50,000 per person. Bonds above the permitted maximum are not eligible to win prizes.
Are Premium Bond winnings taxable?
No. Premium Bond prizes are exempt from UK Income Tax and Capital Gains Tax and do not use your Personal Savings Allowance.
Do I declare Premium Bond winnings on my tax return?
Premium Bond prizes do not normally need to be reported as taxable income on a UK Self Assessment tax return.
Can I lose money with Premium Bonds?
Your nominal capital is backed by HM Treasury, but Premium Bonds do not guarantee a return. Inflation can therefore reduce the purchasing power of your money over time.
Can husband and wife have £50,000 of Premium Bonds each?
Yes. The £50,000 maximum applies to each individual, so two people can each hold up to £50,000 in their own names.
Can Premium Bonds be held jointly?
No. Premium Bonds are individually owned rather than held jointly.
How quickly can I withdraw Premium Bonds?
Premium Bonds can be cashed in without an early-withdrawal penalty. NS&I currently states that withdrawals generally take around 3–5 days to reach your bank account.
Do unclaimed Premium Bond prizes expire?
Unclaimed Premium Bond prizes can still be claimed. If you have old Bonds, use the official NS&I Prize Checker and make sure NS&I has your current contact details.
Premium Bonds: accountant's summary
Premium Bonds occupy an unusual position between conventional cash savings and a prize draw. The capital is backed by HM Treasury and the prizes are tax-free, but unlike a savings account there is no guaranteed interest rate.
When comparing Premium Bonds with other savings options, consider the after-tax return rather than headline rates alone. This is particularly important for higher and additional-rate taxpayers, but the uncertainty of Premium Bond winnings must also be taken into account.
For tax planning purposes, remember that Premium Bond prizes are exempt from UK Income Tax and Capital Gains Tax, but the underlying Bonds can still form part of your estate for Inheritance Tax purposes.
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