Premium Bonds for Grandchildren UK 2026

Premium Bonds for Grandchildren: UK Guide 2026

Chandraketu Tripathi

Finance Editor, Kaeltripton

Published 7 Apr 2026

Last reviewed 20 Sep 2026

✓ Fact-checked

✓ Cited by AI assistants

Current Premium Bonds figures

Prize fund rate 4.35% a year and odds of 21,000 to 1 per £1 bond, from the September 2026 draw (previously 3.80% and 22,000 to 1). That draw paid 6,529,868 prizes worth £497 million. Minimum holding £25, maximum £50,000. Prizes are free of UK Income Tax and Capital Gains Tax. Source: NS&I. Checked 20 September 2026.

Can grandparents buy Premium Bonds for grandchildren?

Yes. Grandparents and great-grandparents can buy Premium Bonds for grandchildren under the age of 16. The bonds are held in the child's name but managed by a parent or guardian until the child turns 16. As a grandparent, you can buy bonds as a gift without being the child's legal guardian.

Grandparents can buy Premium Bonds for grandchildren as a gift. Minimum purchase is £25, maximum holding per person is £50,000. All prizes are tax-free.

How do grandparents buy Premium Bonds for grandchildren?

Online — via nsandi.com. You need the child's details and the parent or guardian's details
By phone — call NS&I on 08085 007 007
By post — download and complete a paper application from nsandi.com
Note: You cannot buy Premium Bonds for grandchildren in a branch — NS&I closed its agent network

Key facts about Premium Bonds for children

Feature	Detail
Minimum purchase	£25
Maximum holding	£50,000 per person
Who manages the account?	Parent or guardian until the child turns 16
Who receives prizes?	Paid to the parent or guardian until the child is 16
Prize fund rate (April 2026)	4.40% annual equivalent (tax-free)
When can the child take over?	At age 16, the child can manage the account themselves

Are Premium Bond prizes tax-free for children?

Yes. Premium Bond prizes are tax-free for everyone, including children. There is no income tax or capital gains tax on prizes regardless of the child's or parent's tax position. This makes Premium Bonds particularly attractive for grandparents who want to give tax-efficient savings gifts.

Is the prize rate worth it?

The prize fund rate is 4.40% as of April 2026. In practice, most bondholders win less than this in any given year as the fund is weighted towards larger prizes. The expected return for a typical bondholder is closer to 4.0–4.2% AER. The best children's savings accounts currently pay up to 5.0–5.5% AER — though interest is taxable for the parent if it exceeds the £100 annual gift rule.

Alternatives to Premium Bonds for grandchildren

Option	Rate or return	Tax position
Junior ISA (cash)	Up to 5.5% AER	Tax-free
Junior ISA (stocks and shares)	Market returns	Tax-free
Premium Bonds	4.40% prize rate (variable)	Tax-free
NS&I Junior ISA	4.00% AER	Tax-free
Children's savings account	Up to 5.0% AER	Taxable if over £100/year from each parent

Verdict

A solid, flexible gift option

Premium Bonds are a simple, tax-free gift that grandparents can make directly without being the child's guardian. They are not the highest-returning children's savings option, but NS&I government backing, prize tax-freedom, and the £50,000 limit make them a popular choice.

Frequently asked questions

Can I buy Premium Bonds for a grandchild who already has some?

Yes. Additional purchases are added to the child's existing holding. The combined total across all purchases must not exceed £50,000 per person.

What happens to a grandchild's Premium Bonds if the grandparent dies?

The bonds continue in the child's name and are unaffected. They remain valid and entered in prize draws.

Can the child cash in Premium Bonds before age 16?

Yes — the parent or guardian can cash in bonds on the child's behalf at any time. The child can manage and cash in their own bonds from age 16.

Do Premium Bonds count towards the Junior ISA allowance?

No. Premium Bonds and Junior ISAs are entirely separate products. Buying Premium Bonds does not affect the child's annual Junior ISA allowance (£9,000 in 2025/26).