TL;DR
Premium Bonds bought during a calendar month enter the prize draw from the start of the second following calendar month. The current annual prize fund rate is published by NS&I. Customers can hold up to £50,000 in Premium Bonds.
NS&I Premium Bonds bought today only enter the monthly prize draw from the start of the second calendar month after purchase, under the long-standing eligibility rules. The current annual prize fund rate is set by NS&I and reviewed periodically, with prize amounts running from £25 up to two monthly £1 million jackpots.
How the three-month rule works
Each Premium Bond carries a unique number. A bond bought during, for example, May only becomes eligible for the prize draw from 1 July, the first day of the second calendar month after the purchase month.
The rule exists because NS&I needs time to issue the bond number and add it to ERNIE, the Electronic Random Number Indicator Equipment that selects winners. The June draw uses bonds bought up to the end of April.
What the prize fund rate represents
NS&I publishes the annual prize fund rate to give an average return figure across all bonds. The rate represents the proportion of the total bond pool paid out as prizes each year. Individual holders may win more or less than the rate suggests.
Prizes range from £25 up to two monthly £1 million jackpots. There are also two each at £100,000 and £50,000 and proportionate numbers of mid-tier prizes that add up to the published rate.
How prizes are paid
Winners with prizes of £5,000 or less can choose to have the money paid directly into their bank account or reinvested into more Premium Bonds. Larger prizes are usually paid as a bank transfer.
Prizes are tax-free, which means high-rate taxpayers see a stronger after-tax return than a comparable taxable savings account paying the same nominal yield.
How to buy and how much to hold
Premium Bonds are bought through the NS&I website at nsandi.com or by phone on 08085 007 007. The minimum purchase is £25 and the maximum holding is £50,000 per individual.
Bonds can be purchased through a Direct Debit standing order, by debit card or by bank transfer. Children's Premium Bonds can be held by parents or grandparents on behalf of under-16s.
Cashing in and inheritance rules
Premium Bonds can be cashed in at any time, with the money typically arriving in the bank account within five working days. Bonds cashed in during a calendar month miss that month's draw if they have already been pulled.
On death, Premium Bonds remain in the prize draw for up to 12 months. NS&I sends a letter to executors and any prizes won during that period form part of the estate. The bonds are then cashed in and the proceeds distributed.
Key facts
- Bonds enter the draw from the start of the second calendar month after purchase.
- Maximum holding is £50,000 per person.
- Minimum purchase is £25.
- Prizes are tax-free.
- Bonds remain in the draw for 12 months after the holder's death.
FAQ
When do my new Premium Bonds enter the prize draw?
From the start of the second calendar month after the purchase month. A bond bought in May is in the July draw and onwards. NS&I needs the gap to issue the number and add it to ERNIE.
How much can I hold in Premium Bonds?
The maximum holding is £50,000 per individual. The minimum purchase is £25. Children's bonds can be held by parents or grandparents on behalf of under-16s.
Are Premium Bond prizes taxable?
No, prizes are tax-free. That makes the effective after-tax return better than a comparable taxable savings account, particularly for higher-rate and additional-rate taxpayers.
Can I cash in my Premium Bonds at any time?
Yes, bonds can be cashed in at any time. The money usually arrives in the bank account within five working days. Bonds cashed in during a draw month miss that month's draw if they have already been pulled.
