Last reviewed: June 2026 | Source: NS&I (gov.uk) and HM Treasury
TL;DR- NS&I is the government savings provider, backed by HM Treasury rather than the FSCS.
- Because the backing is HM Treasury, 100 percent of money held with NS&I is secure with no upper limit.
- Premium Bonds pay tax-free prizes instead of interest, with the prize fund rate set periodically by NS&I.
- Other products include Income Bonds, Direct Saver, Direct ISA, Green Savings Bonds and Junior ISA.
- Most accounts can be opened and managed online from 25 pounds, with Premium Bonds from 25 pounds up to a 50,000 pound holding limit.
Key Facts
●Provider backing: HM Treasury, not the FSCS
●Capital security: 100 percent of deposits, no upper limit
●Premium Bonds holding range: 25 pounds minimum to 50,000 pounds maximum
●Premium Bond prizes: Two 1 million pound jackpots paid every month
●Junior ISA limit 2025/26: 9,000 pounds per tax year
●Prize draw frequency: Monthly, with each 1 pound bond having an equal chance
NS&I is the National Savings and Investments arm of HM Treasury, and it is the only UK savings provider where deposits are backed directly by government rather than the Financial Services Compensation Scheme. That distinction matters: the FSCS protects up to 85,000 pounds per person per banking licence, whereas NS&I gives 100 percent capital security with no ceiling. This guide sets out the main NS&I products, how returns are taxed, and the practical steps to open and run an account.
How HM Treasury backing differs from FSCS protection
Money held with NS&I is secured by HM Treasury, so 100 percent of a balance is protected regardless of size, unlike the 85,000 pound per-licence limit that applies to FSCS-covered banks and building societies. This is the single feature that draws savers with large balances to NS&I, because spreading cash across multiple banks to stay under the FSCS threshold becomes unnecessary.
The FSCS is a statutory compensation scheme that pays out only if an authorised firm fails. NS&I sits outside that framework because the Treasury stands behind it directly, which is why NS&I is sometimes described as the safest home for cash in the UK. The trade-off is that headline rates are not always market-leading, since NS&I balances its financing role for government against the need to attract retail deposits.
Savers should still keep records and nominate beneficiaries where the product allows, because the protection covers the value of the holding rather than guaranteeing any particular rate of return over time.
Premium Bonds: prizes instead of interest
Premium Bonds do not pay interest. Instead, each whole pound invested buys a bond number entered into a monthly prize draw, with two jackpots of 1 million pounds and a range of smaller prizes from 25 pounds upward. The minimum holding is 25 pounds and the maximum is 50,000 pounds per person.
NS&I publishes a prize fund rate that represents the notional annual return across all bonds, but no individual holder is guaranteed to win anything. The odds of any single 1 pound bond winning a prize are set by NS&I and adjusted alongside the prize fund rate. Prizes are free of UK Income Tax and Capital Gains Tax.
Bonds become eligible for the draw after they have been held for one full calendar month following the month of purchase. Holders can choose to have prizes paid into a bank account or automatically reinvested up to the 50,000 pound limit. Premium Bonds can be cashed in at any time without penalty, though money withdrawn loses its place in future draws.
Income Bonds, Direct Saver and Direct ISA
Income Bonds pay monthly interest into a nominated bank account and allow easy access to capital, with a typical minimum investment of 500 pounds. The rate is variable and set by NS&I. Interest is paid gross but remains taxable and counts toward the Personal Savings Allowance.
Direct Saver is an online and phone easy-access account that can be opened from 1 pound, with interest added once a year. Direct ISA is a cash ISA paying tax-free interest within the annual ISA subscription limit, which is 20,000 pounds across all ISA types in the 2025/26 tax year.
These accounts are managed almost entirely online through the NS&I website or by phone. Funds can usually be moved in and out without notice, making them suited to savers who value access and absolute capital security over the highest possible rate.
Green Savings Bonds and Junior ISA
Green Savings Bonds are fixed-term savings that help finance government-backed green projects such as renewable energy and clean transport. They pay a fixed rate of interest for the full term, typically three years, and the minimum investment is 100 pounds up to a 100,000 pound maximum per issue. Interest is taxable and paid at maturity.
The NS&I Junior ISA is a tax-free account for children under 18, with contributions capped at 9,000 pounds in the 2025/26 tax year. Anyone can pay in, but the money belongs to the child and cannot be withdrawn until they turn 18, at which point the account converts to an adult ISA.
Both products carry the same HM Treasury backing as the rest of the NS&I range, so capital is fully secure. Fixed-term bonds generally cannot be cashed in early, so savers should be confident they will not need the money before maturity.
How returns are taxed
Premium Bond prizes and the interest within Direct ISA and Junior ISA accounts are free of UK tax. Interest from Income Bonds, Direct Saver and Green Savings Bonds is taxable and counts toward the Personal Savings Allowance, which is 1,000 pounds for basic-rate taxpayers, 500 pounds for higher-rate taxpayers and zero for additional-rate taxpayers.
NS&I reports taxable interest to HMRC, and most savers pay any tax due through an adjustment to their tax code rather than completing a return. Those who already file Self Assessment must declare NS&I interest in the relevant section.
Because ISA and Premium Bond returns sit outside the Personal Savings Allowance, they can be useful for savers who have already used their allowance elsewhere, although the value of any tax shelter depends on individual circumstances.
How to open and manage an NS&I account
Most NS&I products can be opened online in a few minutes using a debit card, a bank transfer or a cheque, provided the saver is a UK resident aged 16 or over. Premium Bonds can be bought for children by parents, grandparents and guardians. Identity is verified electronically, and account access is then handled through the NS&I online portal or telephone service.
Existing customers manage holdings through a single NS&I number that links all their products. Withdrawals from easy-access products are paid to a nominated UK bank account, usually within one to three working days. Premium Bond prizes can be checked online, through the official NS&I prize checker app, or via the monthly results.
Savers should keep their NS&I number and contact details up to date and consider nominating who should receive holdings on death, because NS&I follows specific procedures for bereavement claims that differ from those of high-street banks.
Frequently Asked Questions
Is money in NS&I covered by the FSCS?
No. NS&I is not covered by the Financial Services Compensation Scheme because it is backed directly by HM Treasury. This means 100 percent of money held with NS&I is secure with no upper limit, compared with the 85,000 pounds per person per banking licence that the FSCS protects at other providers. For savers with very large cash balances, this unlimited government backing is the main reason to use NS&I.
Do I pay tax on Premium Bond winnings?
No. All Premium Bond prizes are completely free of UK Income Tax and Capital Gains Tax, so winnings do not need to be declared to HMRC and do not count toward the Personal Savings Allowance. This tax-free status applies regardless of the prize size, including the two monthly 1 million pound jackpots.
What is the maximum I can hold in Premium Bonds?
The maximum Premium Bond holding is 50,000 pounds per person, and the minimum purchase is 25 pounds. Children can hold Premium Bonds bought on their behalf by parents, grandparents or guardians, subject to the same 50,000 pound limit. Holdings above the limit are not permitted, and NS&I will return any excess.
How quickly can I withdraw money from NS&I?
Easy-access products such as Direct Saver, Income Bonds and Premium Bonds allow withdrawals at any time, with funds typically reaching a nominated UK bank account within one to three working days. Fixed-term products such as Green Savings Bonds generally cannot be cashed in before maturity, so savers should only commit money they will not need during the term.
