Savings / Premium Bonds

Premium Bonds
Premium Bonds give you a unique opportunity to win £1 million, tax-free, without losing your original stake.  Invest in Premium Bonds and you will get this chance every month, along with the chance to win one or more of over 500,000 other tax-free prizes that National Savings pay out each month, from £50 to £100,000.  Smart investors treat Premium Bonds as a serious investment, knowing that they could win a stream of small prizes, all tax-free, and hoping that one day they'll win the jackpot!

How do they work?
You can invest from £100 to £20,000 in Premium Bonds, and when you've held them for one full calendar month they qualify for prize draws.  Each £1 unit you hold has a separate and equal chance of winning a tax-free prize - from £50 right up to the jackpot of £1 million. And you'll get this chance for every single month that you hold your Bonds.

How many prizes get paid out?
It depends on how many Bonds are eligible for each draw.  Each month National Savings pay out one prize for every 20,000 £1 units in the draw, so the odds of each £1 unit winning a prize are fixed at 20,000 to 1.  As of the 1^st of February 2002 the odds will be 24,000 to 1 and as of the 1^st of March 2002, when the prize fund changes to 2.4%, the odds of winning will be 28,500 to 1.  The more Bonds you have, the greater your chances of winning.  As the number of Bonds in the draw grows, the number of prizes National Savings pay out goes up. 

National Savings then allocate the prize fund to three different prize bands; higher value, medium value and lower value. Each month there will be one £1 million jackpot guaranteed and the numbers of all the other prizes will vary depending on the size of the prize fund.

What about tax?
All prizes are completely free of UK Income Tax and Capital Gains Tax, whatever rate of tax you normally pay.  And there's no need to declare them on your tax return.

Who can buy Premium Bonds?
Anyone aged 16 or over can buy Premium Bonds for themselves. Premium Bonds can be bought for children under 16, but only by their parents, grandparents, great grandparents or guardians.  A Bond can only be held in the name of one person and is not transferable.

How much can I buy?
The minimum for each purchase is £100 and you can hold up to a total of £20,000 per person.  Purchases above £100 must be in multiples of £10.

Do my Bonds go straight into the prize draw?
Your Bonds are eligible for prize draws once they have been held for one complete calendar month, following the month you buy them.

How do National Savings select the prize winners?
National Savings use a number generating machine called ERNIE (which stands for Electronic Random Number Indicator Equipment.)  Each month ERNIE generates, completely at random, a set of numbers that National Savings use to determine the prize winning Bonds.

Because ERNIE is totally random, every single £1 unit has the same chance of winning.  No numbers are fed into ERNIE beforehand.  The machine generates the list of numbers first, and only then do National Savings match them up against their list of eligible Bonds to see which have won.  This means that there is no way that ERNIE can favour old or new Bonds, or Bonds in certain parts of the country, or consecutive Bonds.  It also means that no Bond numbers can be left out of the draw.

How does National Savings ensure winners are chosen randomly?
National Savings check before and after each and every draw to make sure the process is working perfectly.  Each month ERNIE's entire output is checked by the Government Actuary, who is wholly independent of National Savings, to make sure that the letters and figures generated are free from bias and that each eligible Bond has an equal chance of winning a prize.  These tests have never shown any evidence to suggest that the process is not random.

How will I know if I win?
National Savings will write to you with the good news.

When are the prizes announced?
The £1 million jackpot is announced to the lucky winner on the first working day of the month, followed by the other prizes in order of size.  By the end of the month all the prize notifications for that month's draw should have reached their destinations.

What happens to unpaid prizes?
Everyone is notified automatically when they win a prize.  But inevitably people move, if the prize winner cannot be contacted after 18 months of trying, National Savings will hold on to the prize until the prize winner gets in touch with them.  There's no time limit for recovering your prize.