Premium Bonds FAQs
How are Premium Bond winnings calculated?
Each £1 bond has odds of around 22,000 to 1 of winning a prize in each monthly draw. The prize fund rate (around 3.6%) describes the average return across all bondholders, but it is skewed upward by the two £1 million jackpots. A person with average luck typically wins slightly less than the headline rate, because most prizes are £25 and the giant prizes go to a tiny number of people. This calculator shows both the expected (mean) and typical (median-luck) figures.
Are Premium Bond prizes tax-free?
Yes, completely. Prizes do not count as income, do not use your Personal Savings Allowance, and never appear on a tax return. This makes Premium Bonds most attractive to higher and additional-rate taxpayers who have already used their savings allowance · and they get more attractive still when savings interest tax rises to 22% / 42% / 47% from April 2027.
What are my odds of winning anything in a year?
It scales with your holding. With £1,000 you can expect about 0.55 prizes a year · roughly a 42% chance of winning at least one £25 prize. With £10,000 you can expect 5 to 6 prizes a year (winning something is near-certain), and with the maximum £50,000 around 27 prizes a year, almost all £25. The odds of the £1 million jackpot are astronomically small at any holding.
Are Premium Bonds better than a savings account?
For basic-rate taxpayers with unused Personal Savings Allowance, a good savings account usually wins: the interest is guaranteed and mostly tax-free anyway, while Premium Bond returns are lower on average and lumpy. For higher-rate and additional-rate taxpayers who have used their allowance, the tax-free prize rate often beats the after-tax savings return. Use the inputs on this page to see your own crossover.
Is my money safe in Premium Bonds?
Yes. Premium Bonds are issued by NS&I, backed 100% by HM Treasury, so there is no £85,000 FSCS cap to think about. You can hold £25 to £50,000, and withdraw at any time with no notice or penalty. The real risk is not losing your capital but inflation quietly eroding it in months where you win nothing.
For informational purposes only · Not financial advice · Prize fund rate and odds change · check nsandi.com for current figures · Expected winnings are statistical averages; actual prizes are random and can be zero · Median-luck figure is an approximation excluding jackpot outliers