NS&I raises Premium Bonds prize fund rate to 4.35% for September 2026 draw

What is changing and when

The Premium Bonds prize fund rate will rise to 4.35% tax-free from the September 2026 draw, up from 3.80%. The odds of winning will shorten from 22,000 to 1 to 21,000 to 1 per £1 Bond, and the number of prizes will increase to about 6.5 million, worth roughly £497 million in total.

The change applies to the September 2026 draw, which is the second increase to the prize fund rate in 2026, following the July rise to 3.80%. The improved rate means that for every £100 invested in Premium Bonds, £4.35 a year will be paid out across the prize pot.

The total value of prizes in the September draw is expected to be around £497 million, which is more than £308,000 higher than the August draw. The number of prizes will also increase, with about 6.5 million prizes available, up from the previous month. The two £1 million jackpot prizes will remain in place each month, as will the other prize tiers, which range from £25 up to £100,000.

Holders do not need to take any action to benefit from the rate change. The new odds and prize values will apply automatically to all eligible Bonds entered into the draw.

How the prize fund rate works

The prize fund rate is the annual value of all prizes paid out as a percentage of the total amount invested in Premium Bonds. It is an average figure, not a guaranteed return, and many holders will win nothing in a given year.

At the new rate of 4.35%, the prize fund is calculated as 4.35% of the total value of all eligible Bonds. This money is then distributed across the monthly prize draws, with the number and value of prizes set to match the fund. The rate is not a personal interest rate; it is a measure of the overall prize pool.

Because prizes are random, individual returns can vary widely. Some holders may win multiple prizes in a short period, while others may go for many months without a win. The odds of 21,000 to 1 per £1 Bond mean that, on average, a single Bond has a one in 21,000 chance of winning a prize in any given draw. Holding more Bonds increases the chance of winning, but does not guarantee any particular return.

The prize fund rate is reviewed regularly by NS&I and can change in response to market conditions. The rate is tax-free, which means that any prizes won are not subject to income tax or capital gains tax.

How it compares with easy-access savings

At 4.35%, the Premium Bonds prize fund rate sits below the top standard easy-access savings rates, which are currently near 4.5%. However, Premium Bonds offer tax-free returns and a prize-based structure, unlike the interest paid on standard savings accounts.

For a basic-rate taxpayer, a taxable easy-access account paying 4.5% would yield 3.6% after tax, which is below the Premium Bonds rate. For higher-rate taxpayers, the after-tax return would be even lower, making the tax-free nature of Premium Bonds more attractive. For non-taxpayers, a standard account at 4.5% would provide a higher return than the 4.35% prize fund rate.

The comparison is not straightforward because the prize fund rate is an average, not a guaranteed return. A saver who wins regularly could achieve a return above 4.35%, while another who wins infrequently could receive far less. The suitability of Premium Bonds depends on an individual's tax position and their willingness to accept variable, prize-based outcomes instead of a fixed interest rate.

Premium Bonds also offer capital security, as the original investment is always returned in full when Bonds are cashed in. This makes them a low-risk option, although the potential for low or zero returns in any given period should be considered.

Other NS&I rate moves

Alongside the Premium Bonds change, NS&I is increasing rates on several other products. Direct Saver will rise to 3.75% gross/AER, and Income Bonds will pay 3.69% gross, equivalent to 3.75% AER. British Savings Bonds will also see increases across all fixed terms.

Direct Saver is an easy-access account that allows withdrawals without penalty, with a minimum opening balance of £1. The new rate of 3.75% gross/AER applies from the same date as the Premium Bonds change. Income Bonds, which pay interest monthly, will move to 3.69% gross, with an AER of 3.75% when interest is compounded.

British Savings Bonds, which are fixed-term products, will see their rates rise across all available terms. The exact rates for each term have not been detailed in the announcement, but the increases are part of the same overall adjustment to NS&I's product range.

These changes reflect NS&I's aim to balance the interests of savers with the needs of the government, as the organisation raises funds for the Treasury. The new rates are effective from the September 2026 draw for Premium Bonds, with the other product changes taking effect on the same date.

Frequently asked questions

When does the new Premium Bonds rate start?

The 4.35% prize fund rate applies from the September 2026 draw.

What are the new odds of winning?

Odds shorten to 21,000 to 1 for each £1 Bond, from 22,000 to 1.

Are Premium Bonds prizes taxable?

No. Premium Bonds prizes are tax-free and backed by HM Treasury.

How much can I hold in Premium Bonds?

The maximum holding is £50,000 per person; the minimum purchase is £25.

Is the prize fund rate a guaranteed return?

No. It is an average across all bonds; many holders win nothing in a year.