NEWS | SAVINGS
TL;DR
NS&I raised rates on its British Savings Bonds on 23 June 2026. The one-year bond now pays 4.69% AER - up from 4.50%. Rates rose across all four fixed terms. The three-year Green Savings Bond also increased sharply, from 3.82% to 4.45% AER.
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Key Facts
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What changed on 23 June 2026
NS&I, the government-backed savings provider, launched new issues of its British Savings Bonds across one, two, three and five-year fixed terms on 23 June 2026. The rate increases are available to both new savers and customers with maturing investments rolling into a new term.
The announcement came alongside a new issue of the three-year Green Savings Bond, which saw the most significant rate movement of any product in the range - rising from 3.82% to 4.45% AER. NS&I described the increases as reflecting changes in the wider fixed-term savings market and said the moves would help meet its net financing target for the current year.
How the new rates compare to the market
NS&I's one-year rate of 4.69% AER is competitive with the top of the market for one-year fixed bonds. In the two, three and five-year terms, NS&I's rates are broadly in line with or slightly above other large-name providers, though specialist banks and building societies continue to offer slightly higher headline rates on some fixed terms.
The key distinction for NS&I is security. Unlike deposits held with banks and building societies - which are covered by the Financial Services Compensation Scheme (FSCS) up to £120,000 per person per institution - all money held with NS&I carries 100% Treasury backing with no upper limit. This makes NS&I particularly relevant for savers with balances above £120,000 who prioritise capital safety over achieving the absolute highest rate.
For most savers with balances within the FSCS limit, NS&I's new rates bring it closer to the top of fixed-rate tables, though some providers still offer marginally higher rates in certain terms.
How British Savings Bonds work
British Savings Bonds are the commercial name for NS&I's Guaranteed Growth Bonds and Guaranteed Income Bonds. Both are fixed-term products that lock money away for the duration chosen at the point of opening.
Guaranteed Growth Bonds pay interest annually into the bond itself, meaning the interest compounds and is only accessible at maturity. Guaranteed Income Bonds pay interest monthly into a linked current account, making them more suitable for savers who want a regular income stream.
For tax purposes, the point at which interest becomes accessible determines when it counts toward a saver's Personal Savings Allowance. Savers choosing annual interest on a multi-year Growth Bond may receive a larger lump sum at maturity, which could have implications for savings tax in the year of maturity depending on other income.
No early withdrawal is permitted during the fixed term. Savers should only lock away money they are confident they will not need access to for the full duration.
Green Savings Bonds
The new issue of the three-year Green Savings Bond at 4.45% AER closes most of the gap that previously existed between green and standard three-year bonds. The standard three-year bond pays 4.65% AER, meaning the green premium - the rate you sacrifice to allocate money toward green infrastructure - has fallen from over one percentage point to just 0.20 percentage points.
Green Savings Bonds are used alongside government-issued green gilts to fund environmental projects under the UK Government's Green Financing Framework. The minimum deposit is £100, with a maximum of £100,000 per person. Savers must be aged 16 or over.
Unlike NS&I's standard bonds, the funding raised by Green Savings Bonds is allocated toward specific environmental projects rather than general government expenditure.
NS&I's role in government financing
NS&I has a net financing target set annually by HM Treasury. For 2026/27, that target has been set at £15 billion. When NS&I needs to attract more retail savings to meet its target, it raises rates; when it has sufficient inflows it reduces them. The June 2026 increases reflect an environment where banks are competing aggressively for fixed-term deposits, pushing NS&I to lift its rates to remain competitive in attracting the cash it needs.
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Disclaimer: This article is for general information only and does not constitute financial, legal or immigration advice. Kaeltripton.com is an independent editorial publisher and is not regulated by the FCA, Ofgem or the Home Office. Always check primary sources and consult a qualified adviser before making decisions. |
Frequently asked questions
Can I open a British Savings Bond online?
Yes. New issues of NS&I's British Savings Bonds can be opened through the NS&I website at nsandi.com. Both new customers and existing NS&I savers with maturing investments can apply online.
Is NS&I interest taxable?
Yes. Unlike NS&I Premium Bond prizes, which are tax-free, interest earned on British Savings Bonds is subject to income tax. Basic-rate taxpayers have a Personal Savings Allowance of £1,000 per year. Higher-rate taxpayers have a £500 allowance. Additional-rate taxpayers have no allowance. Interest in excess of the allowance is taxed at the marginal rate.
What happens when my bond matures?
NS&I contacts savers before maturity. At that point, the choice is to withdraw the money or roll it into a new issue. If no action is taken, NS&I will transfer the balance to an Instant Access account while the saver decides.
Are the rates guaranteed for the full term?
Yes. The rate fixed at the point of opening a British Savings Bond applies for the full term, regardless of what happens to market rates during that period. This is the key advantage of fixed-term savings bonds versus variable-rate accounts.
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Primary Sources |
