Are Premium Bonds prizes tax-free?

Yes. Every Premium Bonds prize — from £25 to £1 million — is completely tax-free. Prizes don't count towards your Personal Savings Allowance and you never declare them on a tax return. That makes Premium Bonds most valuable to higher-rate taxpayers who have used their ISA allowance and would otherwise pay tax on savings interest.

How do I check for unclaimed Premium Bonds prizes?

Use the free prize checker on nsandi.com or the NS&I prize checker app — it shows this month's result, the last six draws, and any older prizes you have never claimed. There is no time limit to claim: NS&I holds unclaimed prizes indefinitely, and its figures show millions of prizes worth over £100 million waiting to be claimed. You'll need your holder's number, which is on your bond record or NS&I statements.

Premium Bonds explained: how they work, the odds & unclaimed prizes

Q: How do Premium Bonds work?

Premium Bonds are a savings product from NS&I (National Savings and Investments), backed 100% by HM Treasury. Instead of earning interest, every £1 bond you hold is entered into a monthly prize draw with tax-free prizes from £25 up to two £1 million jackpots. You can hold between £25 and £50,000, your money is never at risk, and you can cash in some or all of your bonds at any time with no penalty. New bonds enter the draw after you have held them for a full calendar month.

Q: Are Premium Bonds worth it?

It depends on your luck and your tax position. Prizes are funded by a prize fund rate (3.80% from the July 2026 draw, with odds of 22,000 to 1 per £1 bond — NS&I changes both from time to time, so check nsandi.com for the current figures). With average luck, most people win less than the headline rate suggests, and the typical return is often below the best easy-access savings rates. They suit people who value the 100% Treasury guarantee, have used their tax-free allowances, or simply like the chance of a big win with no risk to their capital.

Q: How do I trace lost Premium Bonds?

For free. Use NS&I's own tracing service or the joint free service at mylostaccount.org.uk, which searches NS&I, banks and building societies with one form. NS&I aims to respond within about a month. Never pay a third-party tracing or 'bond checker' firm — they can't find anything the free services can't, and some take a cut of money that is already yours.

How Premium Bonds actually work

Premium Bonds are run by NS&I (National Savings and Investments), the government’s own savings bank. You don’t earn interest. Instead, every £1 bond you hold is entered into a prize draw on the first working day of each month.

Rule	What it means
Minimum	£25 to buy in (online, by phone or by post)
Maximum	£50,000 per person, total
Prizes	£25 up to £1 million — including two £1m jackpots every month — all completely tax-free
When bonds enter the draw	After you’ve held them for a full calendar month (buy in July → first draw in September)
Taking money out	Cash in some or all of your bonds any time, with no penalty — you always get back what you put in
Safety	100% backed by HM Treasury — beyond the usual £85,000 FSCS limit that applies to banks

The genuine upsidesYour capital is never at risk, every prize is tax-free (prizes don’t touch your Personal Savings Allowance and never go on a tax return), and the Treasury guarantee covers the full £50,000 — more than the £85,000 FSCS limit matters for most savers, and with no risk of a bank failing. For higher-rate taxpayers who’ve filled their ISA allowance, that tax-free status is the strongest argument.

Buying for children and grandchildren

Anyone aged 16 or over can buy Premium Bonds for a child under 16 — parents, grandparents, aunts, uncles or family friends. Whoever buys them, a nominated parent or guardian looks after the bonds (and hears about any prizes) until the child turns 16. It’s a popular tax-free gift — just remember the same average-returns caveat below applies.

The honest odds — are they worth it?

Premium Bonds don’t pay interest — they pay out a prize fund rate shared unevenly across winners. From the July 2026 draw the prize fund rate is 3.80%, with odds of 22,000 to 1 for each £1 bond in each monthly draw (up from 3.30% and 23,000 to 1 in April 2026). NS&I changes both figures from time to time — always check nsandi.com for the current rate before comparing.

The catch is in the word average:

The prize fund rate is not what a typical holder wins. Because a slice of the fund goes on the big prizes, someone with average luck usually wins less than the headline rate suggests — and many months you’ll win nothing at all.
With a small holding (say £100), the odds mean you could easily go years without a single £25 prize. The more you hold, the closer your returns tend to get to (but still usually below) the headline rate.
The best easy-access savings accounts and cash ISAs often beat the average Premium Bonds return — guaranteed, rather than by luck. If you pay no tax on savings interest anyway (see tax on savings — most basic-rate taxpayers don’t), the tax-free advantage is worth little to you.

Two honest catchesFirst: with average luck the return is usually below the best savings rates, and inflation quietly erodes money that wins nothing — Premium Bonds are a fun, safe punt, not a growth plan. Second: Premium Bonds count as capital (savings) for means-tested benefits like Universal Credit and Pension Credit — over £6,000 they start reducing your award, and over £16,000 they can stop it. See our savings & benefits guide before holding a large amount while claiming.

Unclaimed prizes & lost bonds — money waiting to be claimed

This is the part most people miss. NS&I’s own figures show millions of unclaimed prizes worth over £100 million — prizes won by people who moved house, changed email address, or inherited bonds they never knew about. Two facts matter:

There is no time limit. NS&I holds every unclaimed prize indefinitely — a prize from the 1960s can still be claimed today.
Checking is free and takes minutes. The prize checker on nsandi.com (and the NS&I prize checker app) shows this month’s result, the last six draws, and any older prizes you’ve never claimed. You just need your holder’s number.

Lost track of bonds completely?

If you (or someone in your family) think bonds exist but can’t find the paperwork, use the free tracing routes: NS&I’s own tracing service, or mylostaccount.org.uk — the free joint service from NS&I, UK Finance and the Building Societies Association that searches NS&I, banks and building societies with one form. NS&I aims to reply within about a month. Executors can trace a deceased person’s bonds the same way.

Never pay a tracing firmThird-party “bond tracing”, “unclaimed prize” and “bond checker” websites charge fees — sometimes a percentage — for searches that NS&I and mylostaccount.org.uk do completely free. They have no special access and can’t find anything the free services can’t. If a text, email or call claims you’ve won a Premium Bonds prize and asks for payment or bank details to “release” it, it’s a scam — run it through our scam checker. NS&I never asks for a fee to pay a prize.

Do this now

Tonight, in ten minutes: dig out any old NS&I paperwork and find the holder’s number, then run the free prize checker at nsandi.com or in the NS&I app. No holder’s number? Fill in the one free form at mylostaccount.org.uk — it searches NS&I, banks and building societies together.

Ask older relatives too — bonds bought decades ago are exactly where the unclaimed £100m+ sits. And while you’re hunting, check for lost pensions and dormant accounts the same free way.

Related guides — savings & found money

ISAs & the £20,000 allowance Lifetime ISA Help to Save Trace lost pensions & accounts Tax on savings

Source verification Primary source: NS&I — Premium Bonds product page, prize checker, unclaimed prizes and tracing pages (nsandi.com/products/premium-bonds) plus NS&I corporate announcements and mylostaccount.org.uk. Last verified 3 July 2026 — the £25 minimum and £50,000 maximum, tax-free prizes including two £1m monthly jackpots, the full-calendar-month rule before bonds enter the draw, cash-in-anytime with no penalty, the 100% HM Treasury guarantee, buying for under-16s via a nominated parent/guardian, the 3.80% prize fund rate and 22,000-to-1 odds from the July 2026 draw (NS&I corporate announcement, cross-checked with MoneySavingExpert), the no-time-limit rule on unclaimed prizes, and the free prize checker + free tracing services were all web-checked. NS&I’s published unclaimed-prize figures (2.6m+ prizes worth over £109m, its most recent published count) are stated as “over £100 million” because the total moves each draw. Confidence: High on the rules; the prize fund rate and odds are changed by NS&I from time to time — always confirm the current figures on nsandi.com. Scope: UK-wide. Not financial advice — whether Premium Bonds beat a savings account or ISA depends on your tax position and luck; MoneyHelper (free, government-backed) can help you compare.

Premium Bonds — common questions

How do Premium Bonds work?

Instead of interest, every £1 bond enters a monthly draw with tax-free prizes from £25 to two £1m jackpots. Hold £25–£50,000, cash in any time with no penalty, 100% Treasury-backed. New bonds enter the draw after a full calendar month.

Are Premium Bonds worth it?

Depends on luck and tax. The prize fund rate is 3.80% with 22,000-to-1 odds per £1 bond (from July 2026 — check nsandi.com for the current figures), but average luck usually returns less than the best savings rates. Best for higher-rate taxpayers with full ISAs, or anyone who values total safety plus a shot at £1m.

Are the prizes tax-free?

Yes — every prize, £25 to £1 million, is completely tax-free, doesn’t use your Personal Savings Allowance and never goes on a tax return.

How do I check for unclaimed prizes?

Free, on the nsandi.com prize checker or the NS&I app, using your holder’s number. It shows this month, the last six draws and any older unclaimed prizes. There’s no time limit — over £100m in prizes is waiting to be claimed.

How do I trace lost Premium Bonds?

Free, via NS&I’s tracing service or one form at mylostaccount.org.uk (covers NS&I, banks and building societies). Never pay a tracing or “bond checker” firm — they add nothing and take a cut of money that’s already yours.

Sources: The rules, prize fund rate, odds, unclaimed prizes and tracing routes · NS&I — Premium Bonds · My Lost Account (free tracing). SortedUK is not a regulated adviser and this is general information. Last reviewed: 3 July 2026.

Premium Bonds — how they work, the odds & the unclaimed prizes