Premium Bond Calculator
Calculate your expected prize winnings, odds of winning, and tax-free equivalent rate for your NS&I premium bond holding. Uses the current 2025 prize fund rate of 4.40%.
Enter Your Premium Bond Details
What Are Premium Bonds?
Premium bonds are a savings product offered exclusively by NS&I (National Savings and Investments), the UK government's savings bank. Unlike traditional savings accounts that pay guaranteed interest, premium bonds enter your money into a monthly prize draw. Instead of earning interest, you win tax-free prizes ranging from £25 to £1,000,000.
Every £1 invested equals one bond number, and each number has an equal chance of winning in each monthly draw. The odds of any single bond winning a prize in any given month are 1 in 21,000. With the maximum £50,000 holding, you have 50,000 chances per month, significantly improving your statistical probability of winning.
Premium bonds are one of the most popular savings products in the UK, with over 21 million people holding more than £125 billion in total. Their government backing, tax-free prize income, and instant access make them uniquely attractive for UK savers.
Current Prize Rate: 4.40% (2025)
NS&I sets a prize fund rate, currently 4.40% per annum as of 2025. This means that 4.40% of all eligible bond holdings are distributed as prizes each month. This is not a guaranteed return — it is a statistical average. If the prize fund were distributed equally to all bondholders, everyone would receive 4.40%. In reality, distribution depends entirely on luck via ERNIE (Electronic Random Number Indicator Equipment).
History of Premium Bond Prize Rates
The prize rate has changed significantly over the years, following movements in Bank of England base rates:
- 2020-2022: 1.00% – 1.40% (historically low base rate era)
- 2023: 3.30% rising to 4.65% (following base rate rises)
- 2024: 4.40% – 4.65% (adjusted following base rate cuts)
- 2025: 4.40% (current rate)
NS&I may adjust the prize rate at any time based on market conditions and HM Treasury instruction.
How the Monthly Prize Draw Works
Each month, ERNIE (Electronic Random Number Indicator Equipment) — a hardware random number generator — selects winning bond numbers from the eligible pool. ERNIE has been running since 1957, with the current generation (ERNIE 5) based on quantum technology, making it genuinely random and impossible to predict or influence.
To be eligible for a draw, bonds must have been held for a complete calendar month before the draw. So if you buy bonds in January, they first enter the February draw. Bonds remain eligible indefinitely until withdrawn or until the holder passes away.
Premium Bond Prize Structure 2025
| Prize Value | Monthly Draw Prizes (approx) | Odds (per £1 bond) |
|---|---|---|
| £1,000,000 | 2 | 1 in ~55 billion |
| £100,000 | 91 | Very rare |
| £50,000 | 182 | Very rare |
| £25,000 | 363 | Very rare |
| £10,000 | 726 | Rare |
| £5,000 | 1,452 | Rare |
| £1,000 | 21,712 | Uncommon |
| £500 | 21,712 | Uncommon |
| £100 | ~2,031,370 | 1 in ~21,000 |
| £50 | ~2,031,370 | 1 in ~21,000 |
| £25 (minimum) | ~2,880,000 | Most common |
Prize counts are approximate and vary monthly based on total eligible bonds and prize fund rate.
Are Premium Bond Winnings Tax Free?
Yes, all premium bond prizes are completely tax-free in the UK. This is established under UK law (National Savings Act 1971 and subsequent legislation). Neither income tax, capital gains tax, nor inheritance tax applies to premium bond prizes. Even the £1,000,000 jackpot is paid entirely tax-free.
This tax-free status makes premium bonds particularly valuable for higher-rate taxpayers. At the current 4.40% prize rate:
- Basic rate taxpayers (20%): Need a taxable savings rate of 5.50% to match 4.40% tax-free
- Higher rate taxpayers (40%): Need a taxable savings rate of 7.33% to match — currently very difficult to achieve with any safe deposit
- Additional rate taxpayers (45%): Need a taxable savings rate of 8.00% to match — essentially impossible with safe deposits
Who Benefits Most from Premium Bonds?
Premium bonds are most advantageous for:
- Higher and additional rate taxpayers who have already used their ISA allowance. The tax-free prize equivalent is highly competitive compared to any safe taxable account.
- Savers with large balances (ideally £10,000+). Statistical returns are more predictable with larger holdings, and the probability of winning meaningful prizes increases substantially.
- Those who have used their £20,000 ISA allowance for the year. Premium bonds offer the next best tax-efficient home for additional savings.
- People who value capital safety. Unlike bank deposits, premium bonds are backed 100% by HM Treasury with no limit — the FSCS only covers bank deposits up to £85,000 per institution.
Premium Bonds vs Savings Accounts: Which Is Better?
The answer depends on your tax position and risk tolerance. For a basic rate taxpayer who has not used their £1,000 Personal Savings Allowance (PSA), a top easy-access savings account at 5.00% might beat the expected 4.40% prize rate on statistical return. For a higher-rate taxpayer who has exceeded their £500 PSA, the tax-free nature of premium bonds makes them extremely competitive.
A key consideration is that premium bond returns are probabilistic. A small holding of £1,000 might win nothing for months, even though statistically it "should" earn £44 per year at 4.40%. The law of large numbers applies: larger holdings and longer time horizons produce results closer to the statistical average.
How to Buy Premium Bonds
Premium bonds can be purchased directly through:
- NS&I website (nsandi.com) — fastest and most convenient, online transfer within 1-2 business days
- NS&I phone (0808 500 7007) — available 8am-6pm Monday to Friday
- Post Office — some branches, though many no longer offer this service
- Standing order — set up a regular monthly purchase via your NS&I account
You must be 16 or older to buy premium bonds in your own name. Parents and legal guardians can buy premium bonds for children under 16.
Claiming Your Winnings
NS&I notifies prize winners in several ways. If you have registered a bank account with NS&I, prizes are automatically paid to your nominated bank account within 3 working days of the draw. You can also log into your NS&I account online to see all prizes won and choose to reinvest them into additional bonds.
If you think you may have unclaimed prizes (particularly from older bonds or after moving address), use the free NS&I prize checker tool on their website. There is no expiry on claiming prizes.
Frequently Asked Questions
What is the current premium bond interest rate / prize rate?
The current NS&I premium bond prize fund rate is 4.40% per annum as of 2025. This represents the percentage of all eligible bond holdings allocated to prizes each month. It is not a guaranteed interest rate — your actual return depends on luck. NS&I can change this rate at any time based on market conditions.
Are premium bond prizes tax free?
Yes, all premium bond prizes are completely tax-free in the UK regardless of prize size. This applies to income tax, capital gains tax and inheritance tax on prizes. The £1,000,000 jackpot is paid tax-free. This makes premium bonds particularly valuable for higher-rate and additional-rate taxpayers, for whom the effective equivalent taxable rate is 7.33% and 8.00% respectively at the current 4.40% prize rate.
What are the odds of winning the premium bond jackpot?
The odds of a single £1 bond winning the £1,000,000 jackpot in any given month are approximately 1 in 55 billion. Even with the maximum £50,000 holding, your odds of winning the jackpot in a single month are roughly 1 in 1.1 million. Only 2 jackpots are awarded each month across all 125+ billion eligible bonds. The overall odds of winning any prize are a more modest 1 in 21,000 per £1 bond per month.
How are premium bonds better than savings accounts?
Premium bonds offer 100% government-backed security (no £85,000 FSCS limit), completely tax-free prizes, and instant access to your capital. For higher-rate taxpayers who have used their ISA allowance, the effective after-tax equivalent rate of 7.33% (for 40% taxpayers) makes them extremely difficult to beat with any safe savings product. The main disadvantage is the lack of guaranteed returns — smaller holdings may underperform the stated prize rate.
What is the maximum you can hold in premium bonds?
The maximum holding per person is £50,000. There is no minimum per transaction, though the smallest bond unit is £1, and the minimum initial purchase has historically been £25. Children can also hold premium bonds up to £50,000, purchased by a parent or legal guardian on their behalf. Premium bonds cannot be held jointly — each person has their own individual account.
How long does it take to get premium bond winnings?
If you have a nominated bank account registered with NS&I, prizes are paid automatically within 3 working days of the monthly draw result being published (usually the first working day of the month). You can also choose to reinvest prizes automatically into new bonds. Alternatively, prizes can be claimed via cheque by post. To check for unclaimed prizes from past draws, use the NS&I prize checker tool on nsandi.com.