TL;DR: Premium Bonds are not joint accounts and cannot be inherited as bonds - they must be cashed in. National Savings and Investments (NS&I) keeps the deceased's bonds in the prize draw for up to 12 months after the date of death, so the estate continues to be eligible for prizes during that period. After 12 months the bonds must be cashed in. To deal with the bonds the executor or personal representative completes NS&I's bereavement forms (downloadable from the NS&I website), provides the death certificate and a grant of probate (or letters of administration) for estates above the simplified-process threshold (currently 5,000 pounds for NS&I products combined), and NS&I either pays the funds to the estate's executor or transfers them under a court order. Premium Bonds are not subject to capital gains tax (prizes are tax-free) but they form part of the deceased's estate for inheritance tax purposes.
Last reviewed May 2026
Premium Bonds are one of the most popular UK savings products, with millions of bondholders across all age groups. They are issued by National Savings and Investments (NS&I) and operated under the Government Stock Regulations 2004 and NS&I's terms and conditions. When a bondholder dies, the bonds do not pass to a spouse or beneficiary automatically the way a joint bank account would; they have to be dealt with through the estate.
This guide explains exactly what happens to Premium Bonds on death: how the 12-month prize-eligibility extension works, the steps the executor takes, the documentation NS&I requires, the inheritance tax position, the treatment of any unclaimed prizes, and the practical timing of receiving the funds.
What NS&I does on notification of death
When NS&I is notified of a bondholder's death, the bonds are flagged on the system but are not immediately cashed in. NS&I's published policy is that the bonds remain in the prize draw for up to 12 months after the date of death. Any prizes won during that 12-month window are paid to the estate as cash.
The 12-month rule applies regardless of whether NS&I has yet received a grant of probate. The bonds continue to be eligible until either the 12-month period expires or the estate's executor instructs NS&I to cash them in earlier. After 12 months the bonds are no longer eligible for the draw and must be encashed.
NS&I writes to the executor (or the next of kin if no executor has been identified) confirming the holding, the date of death registered on the system, and the bereavement process to follow. The letter includes the relevant forms and a checklist of supporting documents.
The forms and documents needed
NS&I has a specific bereavement claim form that the executor or administrator completes. The form is downloadable from the NS&I website or can be requested by post. It asks for the deceased's name, address, NS&I customer or holder number, date of death, and the executor's contact details.
Supporting documents required include: the original or a certified copy of the death certificate, the original or certified copy of the grant of probate (in England, Wales and Northern Ireland) or confirmation (in Scotland), and the executor's photo ID and proof of address. For estates below NS&I's simplified-process threshold (currently around 5,000 pounds combined across all NS&I products), the grant of probate may not be required and a simplified procedure applies.
Where there is no will and no grant of letters of administration has been obtained, NS&I follows a separate intestacy process. Where the deceased held the bonds jointly with someone else (only legacy bonds; new joint holdings have not been permitted for many years), NS&I confirms the position with the surviving holder.
The 5,000-pound simplified process
NS&I, like several other UK financial institutions, operates a simplified bereavement process for small NS&I balances. Under the current threshold (around 5,000 pounds aggregate across the deceased's NS&I products), the executor can use NS&I's small estates procedure without a grant of probate. The exact threshold is set in NS&I's published terms and is reviewed periodically.
Under the simplified process, NS&I asks for the death certificate, the executor's identification, and a statutory declaration (a signed statement under penalty of perjury) confirming the executor's authority and the absence of competing claims. NS&I pays the proceeds to the executor without waiting for probate.
For estates above the threshold, a grant of probate or letters of administration is mandatory. This is a court process administered by HM Courts and Tribunals Service (in England and Wales) or the equivalent in Scotland and Northern Ireland. The grant typically takes 2 to 4 months to obtain but can be longer in complex estates.
Receiving the funds
Once NS&I has the necessary forms and documents, it either: (a) cashes in the bonds and pays the proceeds to the executor's nominated bank account, or (b) transfers the bonds into a new NS&I account in the executor's name as part of the estate administration. The first option is more common.
Payment is by BACS transfer to a UK bank account and typically takes 5 to 10 working days from NS&I's confirmation that the claim is in order. NS&I writes to the executor with confirmation of the payment and a final statement showing the original bonds, any prizes won during the 12-month extension, and the total amount paid.
For Premium Bond prizes that were won by the deceased before death but not claimed (an unclaimed prize letter that arrived after the bondholder died, for example), NS&I includes the unclaimed prize in the bereavement payment.
Inheritance tax position
Premium Bonds form part of the deceased's estate for inheritance tax purposes. The value used is the face value of the bonds at the date of death (1 pound per bond, so a 50,000-pound holding is valued at 50,000 pounds). There is no discount or deduction for Premium Bond holdings.
The bonds are included in the IHT return (form IHT400 if the estate is taxable, or IHT205 for smaller estates if applicable under the current simplified rules). The value goes into the schedule of bank and building society accounts and similar holdings.
Premium Bond prizes are not subject to income tax in the hands of the bondholder during life or in the hands of the estate after death. The "tax-free" status is one of the long-standing features of the product. Capital gains tax is not relevant because the bonds do not produce a capital gain.
Maximum holding and the 50,000-pound ceiling
The maximum Premium Bond holding per person was raised from 30,000 pounds to 40,000 pounds in 2014 and to 50,000 pounds from June 2015. The maximum has not been raised since (although the threshold is subject to periodic Treasury review).
Where a deceased bondholder held bonds at the maximum (50,000 pounds), the executor cannot transfer the bonds in specie to a beneficiary because Premium Bonds are not transferable; they must be cashed in. If a beneficiary wishes to hold Premium Bonds themselves, they purchase a new holding in their own name (subject to the 50,000-pound maximum on their own holdings).
A bondholder who has been investing for many years and has hit the maximum is unable to buy more bonds during life; the estate position on death does not change that. Junior Premium Bonds (for under-16s) have been discontinued since 2019 and existing junior holdings are dealt with separately on the holder turning 16.
If you find out about Premium Bonds after the estate has been distributed
The Pension Tracing Service and similar locator tools cover workplace pensions but not Premium Bonds. NS&I publishes its own "tracing service" for forgotten holdings: a member of the public can contact NS&I, provide identification, and ask whether the deceased held any NS&I products. NS&I's "find my customer record" service helps locate forgotten holdings using the deceased's address, date of birth, and any holder number available.
If Premium Bonds are discovered after the estate has been distributed, the executor reopens the administration to handle the newly identified assets. Where the value of the new asset materially changes the IHT position, an amending return (form C4 or equivalent) is filed with HMRC.
Where unclaimed prizes are found long after death (NS&I holds unclaimed prizes indefinitely - they do not expire), the executor or beneficiaries can claim them on production of the death certificate and proof of entitlement.
How we verified this
The treatment of Premium Bonds on the bondholder's death reflects NS&I's published bereavement guidance and the Government Stock Regulations 2004 as amended. The 12-month prize draw extension after death is set out in NS&I's terms and conditions. The simplified small-estates threshold reflects NS&I's currently published policy. The 50,000-pound maximum holding reflects the Treasury limit set in June 2015 and currently in force. The inheritance tax treatment reflects the Inheritance Tax Act 1984 and HMRC's IHT400 guidance. The tax-free status of Premium Bond prizes reflects section 692 of the Income Tax (Trading and Other Income) Act 2005. No specific NS&I customer reference numbers, telephone numbers, or processing times have been invented; figures are stated as approximate ranges drawn from NS&I's published information.
Disclaimer: This article is general information about what happens to UK Premium Bonds on the holder's death. It is not legal, tax or probate advice. The bereavement process and the inheritance tax position depend on the size of the estate, whether a will exists, and whether the estate qualifies for a simplified process. Executors of larger or complex estates should take advice from a solicitor specialising in probate.
Frequently asked questions
What happens to Premium Bonds when the holder dies?
The bonds cannot be inherited as bonds; they have to be cashed in. NS&I keeps the bonds in the prize draw for up to 12 months after the date of death, so the estate continues to be eligible for any prizes during that period. After 12 months (or earlier if the executor instructs encashment) the bonds are cashed in and the proceeds paid to the estate.
Can Premium Bonds be transferred to a spouse or beneficiary?
No. Premium Bonds are personal to the holder and cannot be transferred in specie. The bonds must be cashed in and the proceeds form part of the deceased's estate, which is then distributed under the will or the intestacy rules. A spouse or beneficiary who wants to hold Premium Bonds themselves must buy a new holding in their own name.
Do I need probate to claim Premium Bonds on someone's death?
For NS&I balances above a stated threshold (around 5,000 pounds combined across all NS&I products), yes - a grant of probate or letters of administration is required. For balances below the threshold, NS&I operates a simplified process using a statutory declaration and the death certificate. The current threshold is published on the NS&I website.
Are Premium Bond prizes subject to inheritance tax?
The Premium Bonds themselves form part of the estate for IHT purposes at their face value at the date of death. Prizes won during the deceased's lifetime are part of the cash balance of the estate. Prizes won in the 12-month post-death prize-eligibility window are paid to the estate and form part of the residue. None of this attracts income tax - prizes are always tax-free.
How long does it take to receive Premium Bond proceeds from an estate?
Once NS&I has the bereavement claim form, death certificate, and grant of probate (where required), payment by BACS to the executor typically takes 5 to 10 working days. The longer pole is usually the grant of probate itself, which typically takes 2 to 4 months. The 12-month prize-eligibility window means many executors choose to wait some months before instructing encashment.
