Quick Answer: Premium Bonds now pay a prize fund rate of 4.35%, up from 3.80%, and the odds on each £1 bond have shortened to 21,000 to 1. The NS&I prize fund rate increase kicked in with the September 2026 draw, bringing around 308,000 more tax-free prizes.
NS&I announced it all on 18 August 2026, hitting over 22 million holders. It is the second boost this year, taking the rate to its best level since December 2024.
- Prize fund rate up from 3.80% to 4.35%
- Odds better at 21,000 to 1, down from 22,000 to 1
- Prize pot up about £63 million, to £497,326,725
- Prizes up from 6,224,837 to an estimated 6,533,031
- Direct Saver, Income Bonds and British Savings Bonds also got a bump
What the NS&I Prize Fund Rate Increase Means
Premium Bonds pay no interest. NS&I picks an annual prize fund rate, which decides how much goes into the monthly ERNIE draw, running since November 1956. At 4.35%, every £100 in Bonds throws £4.35 a year into the pot. Not into your account. Across everyone.
Money Saving Expert flagged how fast this turned. July’s rise, from 3.3% to 3.8%, was the first in nearly three years after a long run of cuts.
Where the Extra Prizes Have Gone
NS&I has not sprinkled prizes evenly. It has shifted money up the table. September has 12 more £100,000 prizes, 27 more £50,000 prizes and 51 extra £25,000 prizes, plus over 2.3 million £100 prizes and the same at £50. Both £1 million jackpots stay.
The £25 tier fell from 2,289,959 to 1,717,659. Fewer tiny wins, more decent ones.
| Prize value | August 2026 | September 2026 (estimated) |
| £1,000,000 | 2 | 2 |
| £100,000 | 83 | 95 |
| £50,000 | 165 | 192 |
| £25,000 | 331 | 382 |
| £10,000 | 827 | 954 |
| £5,000 | 1,654 | 1,909 |
| £1,000 | 17,347 | 19,892 |
| £500 | 52,041 | 59,676 |
| £100 | 1,931,214 | 2,366,135 |
| £50 | 1,931,214 | 2,366,135 |
| £25 | 2,289,959 | 1,717,659 |
| Total | 6,224,837 (£433,663,575) | 6,533,031 (£497,326,725) |
Better Odds Still Do Not Guarantee a Win
Every £1 buys one Bond number. Put in £1,000, and you get 1,000 entries. Max out at £50,000; you get 50,000. No favouritism, just more tickets.
At 21,000 to 1, a £1,000 holding averages 0.57 wins a year, roughly a 43% shot at winning anything. The full £50,000 averages 2.38 winning numbers per draw.
AJ Bell’s freedom of information request found 62% of holders have never won a thing, and under 1% of prizes between February 2025 and January 2026 went to holdings below £1,000. Sarah Coles reckons NS&I is “pulling out all the stops” for cash.
Four Other NS&I Rates Rose Too
Around 428,000 Direct Saver and 222,000 Income Bonds customers also gained on 18 August 2026, having last moved in May. Fresh British Savings Bond issues replaced those sold from 31 July, and anything maturing from 18 August switches over automatically.
| Product | Rate change on 18 August 2026 |
| Direct Saver | 3.45% to 3.75% AER |
| Income Bonds | 3.40% to 3.69% gross (3.75% AER) |
| Growth Bonds 1-year | 4.72% to 4.82% AER |
| Growth Bonds 2-year | 4.70% to 4.81% AER |
| Growth Bonds 3-year | 4.68% to 4.83% AER |
| Growth Bonds 5-year | 4.75% to 4.85% AER |
Guaranteed income bonds pay 4.72%, 4.71%, 4.73% and 4.75% gross across these terms.
How They Stack Up Against Savings and ISAs
Prizes dodge income tax and capital gains tax, the real selling point. HMRC gives basic-rate taxpayers £1,000 of tax-free interest a year, higher-rate payers £500 and top-rate payers nothing. Earn under £17,570 and you get up to £5,000 more.
At 4.5%, a basic-rate taxpayer passes that allowance at just over £22,222 of savings and a higher-rate taxpayer at £11,111. That 4.5% pays £45 a year per £1,000, guaranteed. That is the entire difference.
The best easy-access accounts pay up to 5% on £5,000, and the top easy-access cash ISA sits at 4.56%. Caitlyn Eastell at Moneyfactscompare.co.uk warns that 4.35% “shouldn’t be mistaken for a headline rate”. Once your allowance is gone, a 40% taxpayer needs 7.25% gross to match it.
Who Actually Benefits
Have you filled your £20,000 ISA allowance and still have cash sitting there? Bonds start making sense, even if you pay higher or top-rate tax on a big balance. Win 4.35% on £50,000, and that is £2,175, tax-free, backed 100% by HM Treasury. Got a few hundred quid? Look elsewhere.
What Holders Should Do Now
Nothing at all. Every eligible Bond goes in automatically. New buys must sit for one full calendar month, so bonds bought in September wait for the November draw. Reinvested prizes skip that queue.
You can start from £25, hold up to £50,000, and under-16s can have them. Cashing out is free but takes three to five days. The Guardian reports that from 6 April 2027, under-65s can only put £12,000 of their annual allowance into cash.
Why NS&I Moved Now
According to Investorean, it needs £15 billion in net financing this year, give or take £4 billion, and the cash has not rolled in. Bank of England figures show why the fight for savers is fierce: Bank Rate stayed at 3.75% on 30 July 2026, with three members pushing for 4%. The next call is 17 September 2026.
In Short
The NS&I prize fund rate increase means Premium Bonds are the most tempting they have been in nearly two years. Bigger pot, shorter odds, no tax. But it is a lottery, and most months most people win nothing. Want a number you can rely on? A cash ISA still wins.
FAQs
Q. When did the new 4.35% Premium Bonds rate start?
A. From the September 2026 draw. The better odds of 21,000 to 1 also came in at the same time.
Q. Do I need to do anything to get it?
A. No. Every eligible Bond number goes in automatically each month, with nothing to apply for.
Q. Is 4.35% a guaranteed return?
A. No. It is just the average across all bonds. Plenty win nothing all year, while a few win big.
Q. How much can I put in premium bonds?
A. Anything from £25 up to the £50,000 limit. Each £1 gets its own number and entry.
Q. Do I pay tax on Premium Bond wins?
A. No. Prizes are free of income tax and capital gains tax and do not touch your personal savings allowance.
Q. Are Premium Bonds better than a cash ISA?
A. Usually not. The best easy-access cash ISA pays 4.56%, tax-free and guaranteed, which beats an uncertain 4.35%.
Sources & References:
- Money Saving Expert – July’s rise, from 3.3% to 3.8%, was the first in nearly three years after a long run of cuts.
- NS&I – September has 12 more £100,000 prizes, 27 more £50,000 prizes and 51 extra £25,000 prizes, plus over 2.3 million £100 prizes and the same at £50.
- The Guardian – From 6 April 2027, under-65s can only put £12,000 of their annual allowance into cash.
- Investorean – NS&I needs £15 billion in net financing this year, give or take £4 billion, and the cash has not rolled in.
