How to gift Premium Bonds

If you're looking to give someone a special present, you could consider gifting them some Premium Bonds.

Not only could your loved one be in with a chance of winning a £1 million jackpot, they could also win several other cash prizes every month.

Premium Bonds can be a good way to start a savings habit, and the monthly prize draw also means they can be good fun.

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In July’s Premium Bond prize draw alone, almost 6 million savers won a windfall between £25 and £1 million, with the month’s prize winnings totalling over £417 million.

But how do you gift Premium Bonds and what are the rules?

You can’t buy Premium Bonds on behalf of other adults, but you can buy them on behalf of children under 16 – whether that’s your own child or the child of a friend or family member.

Each Premium Bond is worth £1, but the minimum investment amount is £25. Savers can hold up to £50,000 in Premium Bonds in total, making them a good gift idea for a broad range of budgets.

Any winnings you get from Premium Bonds are entirely tax-free, meaning what you win is what you get.

If you are buying for a close friend’s child, a £25 gift could be the perfect amount.

Alternatively, if you are looking to give money to your own children – perhaps to reduce your inheritance tax liability – you have the option of buying hundreds or even thousands of pounds worth of Premium Bonds.

How do Premium Bonds work?

Premium Bonds don’t operate like a usual savings account or bond. Instead, bondholders are entered into a monthly prize draw for the opportunity to win prizes worth between £25 and £1 million.

Premium Bonds are managed by the state-owned savings provider, NS&I. For those asking if N&SI is safe, rest assured that Premium Bonds are backed by the government, making them completely secure.

There is no guaranteed interest on Premium Bonds but NS&I does set a prize fund rate, which helps it decide how many prizes to pay out each month.

This has been falling in recent months after a recent high of 4.65% in September 2023 with the rate being cut five times since, as interest rates have come down.

From the August 2025 prize draw onwards, the prize fund rate will be cut to 3.6%, down from 3.8% in July’s draw.

Despite the prize fund rate falling, there are still plenty of prizes up for grabs as millions of prizes are paid out every month.

A table showing the value and number of prizes distributed in July’s prize draw can be found below.

Source: NS&I, 2 July

Odds of winning a Premium Bonds prize

The odds of winning in the Premium Bonds draw can change. Currently, the odds of winning a Premium Bonds prize stand at 22,000 to 1 for every £1 bond you hold.

Naturally, the more bonds you hold, the higher your chance of winning a prize. However, as the prize draw is completely random, you do not necessarily have to have thousands in Premium Bonds to win a high value prize.

For example, in July 2004, one lucky bondholder won the £1 million jackpot holding just £17 in Premium Bonds.

However, a Freedom of Information request by AJ Bell recently revealed that about two-thirds of Premium Bond holders have never won a single penny in the monthly prize draws.

Out of the 22.7 million people who hold Premium Bonds, around 14.4 million (63%) have never won.

The data also emphasised how holding more cash in Premium Bonds will mean that you are far more likely to win.

Of the 5.1 million Premium Bond holders who won a prize between March 2024 and February 2025, 80% were repeat winners. The average holding for those who won was £23,397, compared to the average holding for all Premium Bond holders of £5,406.

How to buy Premium Bonds

You can buy Premium Bonds through the NS&I website, over the phone, or by post.

To apply over the phone, call NS&I for free on 08085 007 007. To apply by post, print and complete an application form and return it with a cheque payable to NS&I. Further instructions and the application form can be found on the NS&I website.

If you are applying on behalf of someone else’s child, there are some considerations you should bear in mind. NS&I says you should make sure the parent or guardian is happy to look after the investment for the child, and agrees to you giving out their details.

NS&I will also need to check and confirm the identity of everyone on the application. This means they might be in touch with the parent or guardian to ask for evidence of identity documents.

If you want to personalise the gift, NS&I even allows you to get a free gift card where you can include a message. You can choose to receive this by post or electronically.

How do Premium Bonds work for children?

Until the child turns 16, the parent or guardian named on their application looks after their bonds, regardless of who bought them. Over 84,000 Premium Bond accounts were opened for under-16s in 2024.

Premium Bond prizes are tax-free, and there is flexibility in how they are managed. They can be automatically reinvested to buy more bonds, transferred into an NS&I Direct Saver or Junior ISA account, or paid into a nominated bank account on the child’s behalf.