A Guide to NS&I Bond Types for UK Savers

National Savings and Investments (NS&I) offer a variety of bond types that cater to different saving needs and preferences. From the chance to win up to £1 million with Premium Bonds to contributing towards green projects with Green Savings Bonds, there’s something for every type of saver. Let’s explore each of these options, detailing the investment limits, tax implications, and accessibility to help you make an informed choice.

Premium Bonds

Premium Bonds are a unique savings product where instead of earning regular interest, you enter a monthly prize draw. Here are the key features:

• Access: Premium Bonds can be cashed in at any time with the funds sent to your bank account. You can cash in premium bonds at the same value you bought them for.
• Investment Range: You can invest between £25 and £50,000.
• Tax: The monthly prize draws offer winnings that are tax-free
• Earnings: Earning depend on the luck of the prize draw with top prizes of up to £1 million and a variable prize rate.
• Gifts for Children: You can buy Premium Bonds as gifts for children under 16.
• Reinvestment Options: You can choose to have winnings automatically reinvested or sent as a cheque.
• Note: It’s important to note that the median earnings are typically less than the advertised prize rate, as large prizes (e.g. £100,000 and £1 million) mean many participants win nothing.

Guaranteed Growth Bonds (British Savings Bonds)

These are online-only accounts designed for savers who wish to lock in their money to earn guaranteed compounding returns over a fixed term. Key aspects include:

• Access: No withdrawals are allowed until the end of the 3-year term.
• Investment Range: Each person can invest between £500 and £1 million.
• Tax: Interest earned is taxable in the year the bond matures.
• Term: The bonds have a 3-year term.
• Introduction: These were announced in the Spring Budget of 2024.
• Account Type: Available only through an online account.

Guaranteed Income Bonds (British Savings Bonds)

These bonds are similar to the Guaranteed Growth Bonds but are designed to provide a monthly income. Features include:

• Access: Funds cannot be withdrawn until the 3-year term ends.
• Investment Range: The investment range is also between £500 and £1 million per person.
• Tax: Interest counts towards your taxable income in the year when it’s received, but actual tax depends on total income and tax rate.
• Income: Earn a guaranteed monthly income over a 3-year term.
• Introduction: Also introduced in the Spring Budget of 2024.
• Account Type: Available only through an online account.

Income Bonds

Income Bonds are suitable for savers looking for flexibility along with a steady income. Their features are:

• Access: They offer easy access, with no notice required and no penalties for withdrawals.
• Investment Range: You can invest between £500 and £1 million per person.
• Tax: Interest counts towards your taxable income in the year when it’s received, but actual tax depends on total income and tax rate.
• Interest Payment: Interest is paid monthly directly to your bank.

Green Savings Bonds

For those interested in environmentally sustainable investments, Green Savings Bonds offer a unique opportunity. Here’s what they offer:

• Access: The investment locks in for three years.
• Tax: Interest earned is taxable in the year the bond matures.
• Investment Range: Between £100 and £100,000 per person.
• Account Type: Available only through an online account.
• Interest Rate: The interest rate is guaranteed and fixed for the term.
• Environmental Impact: Funds are allocated to green projects, with HM Treasury committed to publishing details on the use and benefits of the proceeds.

Other NS&I Offerings

In addition to these options, NS&I also offers products like the Direct Saver, Direct ISA, Junior ISA, and a postal-only Investment Account, catering to a broad range of saving needs. Whether you’re looking to grow your savings securely, generate income, or support environmental initiatives, NS&I provides a reliable and government-backed platform to meet your financial goals.

Legal Disclaimer

The content on this website is for informational purposes only and is not intended as financial advice. We are not financial advisors. Before making any investment decisions, please consult with a professional financial advisor. We make no representations as to the accuracy or completeness of any information on this site and are not liable for any errors or omissions in this information or for any losses or damages arising from its use.