Investing in UK Premium Bonds

When you purchase a UK Premium Bond, you lend money to the British government. Whenever you wish, you can return the bond and get your money back.

The British government has always honoured their bond obligations, and investing in UK Premium Bonds is therefore considered a low-risk investment. Low-risk is not the same as no-risk, however. Just as for money sitting in a bank account or kept hidden under your mattress, inflation can erode the true value of a Premium Bond. If you invest £25 in bonds today, the purchasing power of £25 might be less when you cash in the bond in the future.


A prize raffle instead of interest payments

You will not be paid any interest on your UK Premium Bond. Instead, you will automatically participate in each of the monthly Premium Bond raffles. In a sense, your bonds are like lottery tickets in this rattle. The more you have invested in Premium Bonds, the higher your statistical chance of winning one of the prizes. At the same time, it is definitely possible to win even if you´ve only invested £25 in bonds. It is all up to the luck of the draw. The largest prize is £1 million.

I want to invest in Premium Bonds

If you want to invest in UK Premium Bonds, contact the NS&I (National Savings and Investments). This is a state-owned savings bank in the UK and they are responsible for selling Premium Bonds. They also offer a range of other savings and investment opportunities. If you want to invest in other bonds you should open an account with a bond broker.

Smallest possible investment

You don´t need deep pockets to save in Premium Bonds, since the minimum possible purchase is just £25.

Biggest possible investment

You are allowed save a maximum of £50,000 in Premium Bonds.

How long before I can cash in my Premium Bond?

You can cash in your Premium Bond at any time. You do not need to hold it for a specific amount of time before you cash it in. If you have money that you wish to save for a personal ”emergency fund”, Premium Bonds can be a good choice since it is not difficult to turn the bonds into cash as needed.

emergency fund

What are the odds of winning something in the monthly raffle?

For each £1 bond, the odds are 34,500 to 1.

Prize sizes

The largest individual prize is £1 million.

The smallest individual prize is £25.

Each month, over 3 million individual prizes are raffled out, varying in size from £25 to £1 million.

How much money goes into the prize fund?

At the time of writing, the annual prize fund rate is 1%. Instead of paying 1% interest on the bonds, the government puts that money into the prize funds and raffle it out.

Exactly how much money that is raffled out each month varies somewhat. If we take a look at the month of April in 2021, a total of £88,215,800 was raffled out, divided into 3,068,376 different prizes. This is how the money was allocated:

  • 2 prizes of £1 million each
  • 5 prizes of £100,000 each
  • 9 prizes of £50,000 each
  • 20 prizes of £25,000 each
  • 48 prizes of £10,000 each
  • 96 prizes of £5,000 each
  • 1,764 prizes of £1,000 each
  • 5,292 prizes of £500 each
  • 28,673 prizes of £100 each
  • 28,673 prizes of £50 each
  • 3,003,794 prizes of £25 each

Do I pay tax on my Premium Bond wins?

No, all wins from Premium Bonds are tax-free.

Can I buy Premium Bonds as gifts to children under 16?

Yes, you can.

The Premium Bonds will be controlled by the child´s parent/legal guardian until the child turns 16. It is possible for the parent/legal guardian to cash in the bonds, so only gift bonds to a child if you trust the parent/legal guardian to act responsibly. If the child has more than one parent/legal guardian, you will assign one of them as bond manager when you purchase the bonds.