Last reviewed: 1 June 2026
National Savings and Investments confirmed on 14 May 2026 that the Premium Bonds prize fund rate will rise to 3.80 percent from 3.30 percent, starting with the July 2026 draw. The odds of any £1 bond winning a prize in a given monthly draw shorten to 22,000 to 1 from 23,000 to 1. It is the first rate increase since September 2023 and follows a sequence of cuts that began that month.
- New prize fund rate: 3.80 percent (from 3.30 percent), July 2026 draw onwards
- Odds per £1 bond: 22,000 to 1 (from 23,000 to 1)
- Total monthly prize fund: around £436.8 million
- Extra prizes per month: estimated 322,000
- Total Premium Bonds holders: over 22 million
- First prize rate increase since September 2023
- Maximum holding per person: £50,000
Why NS&I has reversed course
Andrew Westhead, NS&I Retail Director, said the increase reflects changes in the wider savings market and NS&I's 2026/27 Net Financing target. The total value of Premium Bonds eligible for the May 2026 prize draw fell for the first time since June 2023, suggesting that some savers had started cashing in bonds as the prize rate was cut. The Treasury-backed provider has a duty to balance the interests of savers, taxpayers and the wider savings market.
How the new rate compares
The 3.80 percent prize fund rate is an average for the whole pool of bondholders. Most individual savers, even at the maximum £50,000 holding, will not earn 3.80 percent in any given year because prize distribution is skewed by a small number of large prizes. The best one-year fixed Cash ISA rate available on 1 June 2026 was 4.67 percent AER from Hodge Bank. The best easy-access Cash ISA rate was 4.76 percent AER, including a bonus, from Trading 212. All Premium Bonds prizes are free of UK Income Tax and Capital Gains Tax.
Other NS&I rate changes
NS&I also raised interest rates with immediate effect on its Direct Saver, Income Bonds, Direct ISA and Junior ISA. The exact uplifts vary by product. The provider published the full rate table on its corporate news pages on 14 May. NS&I is 100 percent backed by HM Treasury, meaning there is no Financial Services Compensation Scheme limit on holdings.
The bereavement claim payout
Separately, NS&I confirmed in March 2026 that it expects to pay back hundreds of millions of pounds to families of customers who died, after a processing error meant some products linked to deceased customers were missed during bereavement claims. Around 37,500 estates may be affected, with missing payments estimated at up to £476 million. NS&I has published a delivery plan and is contacting affected estates about reimbursement and compensation.
What to do before the July draw
Bonds must be held for a full calendar month before they enter the prize draw. Bonds bought in June 2026 are eligible for the August draw, not July. The June 2026 draw, the last under the 3.30 percent rate, is published on 2 June. Bonds purchased before 31 May 2026 are eligible.
FAQs
When does the new Premium Bonds rate take effect?
The 3.80 percent prize fund rate applies from the July 2026 prize draw. The June draw, published on 2 June, is still under the 3.30 percent rate.
Are Premium Bonds tax-free?
Yes. All Premium Bonds prizes are free of UK Income Tax and Capital Gains Tax. The £50,000 holding cap is per person, including those held for children under 16.
Are my savings safe?
Premium Bonds are 100 percent backed by HM Treasury. There is no upper limit set by the Financial Services Compensation Scheme because the funds are Government-backed.
Do I need to claim my prizes?
Most prizes are paid directly into a nominated bank account or reinvested in more bonds. Over £92 million in Premium Bonds prizes remained unclaimed as of mid 2026. Savers can check their bonds on NS&I's prize checker.
