Money Advice Service

First introduced in 1956, Premium Bonds are now owned by around 23 million people in the UK. Here you can find out what Premium Bonds are, when they might be a good investment and how to go about buying and selling them.

What are Premium Bonds

Premium Bonds are an investment product issued by National Savings and Investment (NS&I). Unlike other investments, where you earn interest or a regular dividend income, you are entered into a monthly prize draw where you can win between £25 and £1 million tax free.

How do Premium Bonds work?

● You’ll need to invest at least £100 (or £50 if you agree to put in money regularly by standing order).

● You can keep buying bonds until you reach the maximum holding level of £50,000.

● You get a unique bond number for every £1 invested. So if you save £100, you’ll get 100 bond numbers (each with a chance to win a prize).

● Once held for a full month bonds are included in a monthly draw and you stand a chance of winning a cash prize.

● You can buy them for yourself or on behalf of your child, grandchild or great-grandchild. You have to be aged at least 16 to purchase Premium Bonds for yourself.

When might Premium Bonds be for you?

Premium Bonds may be for you if you:

● Want the chance to win tax-free cash prizes in a monthly draw.

● If you are a parent, guardian, grandparent or great grandparent wanting to buy for a child under 16 years old.

● Have £100 or more to invest.

Premium bonds might not be for you if you want:

● A regular income.

● Guaranteed returns.

● Concern about the impact of inflation on your savings.

Are Premium Bonds worth it?

Top tip

Your chances of winning the top prize are very slim – most people will win smaller prizes or nothing at all.

● All the money you put into Premium Bonds is secure.

● There’s a very small chance you could earn a very high tax-free return.

● You won’t earn regular income on your bonds.
Most people who buy Premium Bonds will earn only a small amount as a percentage of the money they contribute.

● Unless you win one of the bigger prizes, your return is unlikely to beat inflation. In other words, your money probably won’t grow fast enough to keep up with rising costs and have the same buying power over time due to it being eroded by inflation.

How to buy Premium Bonds

You can buy Premium Bonds directly from NS&I online by registering on their website, or by calling 08085 500 000.

How to sell Premium Bonds

You can cash in your Premium Bonds at any time without penalty through the website if you’ve already registered, by downloading a Premium Bonds Cashing in form and posting it to NS&I or by requesting the form by calling 08085 007 007.

How long does it take to cash in Premium Bonds?

According to NS&I, it takes up to eight working days for the money to reach your account, unless you have elected to cash in after the next draw.


Any prizes you win on a Premium Bond are free from UK Income Tax and Capital Gains Tax.

Are Premium Bonds safe and secure?

Your money is secure, since Premium Bonds are fully backed by the government.

NS&I voluntarily works within the spirit of the Financial Conduct Authority guidelines.

Find out how to sort out a money problem or make a complaint.

Next steps

For more information on Premium Bonds visit the NS&I website or download a Premium Bonds brochure here.

This article is provided by the Money Advice Service.