Cashing In Premium Bonds: How Does It Work & When Can You Do It?

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Emilene LucasLegal Assessment Team Supervisor
Updated on 24th May 2024

Premium Bonds are a type of savings product offered by National Savings and Investments (NS&I) in the UK. Instead of earning interest, bondholders have the chance to win tax-free prizes in monthly prize draws.

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In this article, we'll explain how Premium Bonds work and how to cash them in, either for yourself or if the bondholder dies.

Table of Contents

How do Premium Bonds work? 

You can purchase Premium Bonds in multiples of £25, with a minimum initial investment of £25. There is a maximum holding limit of £50,000 per person. Each £1 invested represents one bond number, and bondholders can hold multiple bonds. 

Instead of earning interest, the money invested in Premium Bonds is entered into monthly prize draws. Each bond number can win from £25 to £1 million.

Prize draws are conducted by Electronic Random Number Indicator Equipment and prize funds are distributed across various tiers, with larger prizes awarded to fewer bond numbers and smaller prizes to a greater number of bond numbers. 

The prizes awarded in the monthly draws are tax-free, meaning bondholders receive the full prize amount without any deductions.

How do I cash in my Premium Bonds?

To cash in your Premium Bonds, you can either log in to your NS&I online account and request a cash withdrawal, call NS&I's helpline and request a withdrawal over the phone, or complete a form and send it by post to NS&I.

Can I cash in a child’s Premium Bonds? 

You can cash in a child’s Premium Bonds if you are responsible for them. 

Is there a minimum amount I need to cash in my Premium Bonds? 

No, there is no minimum amount required to cash in your Premium Bonds. You can cash in as many or as few bonds as you like, up to the total value of your holdings.

How much notice do you have to give to cash in Premium Bonds?

You typically do not need to give any notice to cash in Premium Bonds.

You can request to cash in your Premium Bonds at any time, and the process can usually be completed promptly through National Savings and Investments (NS&I), the government agency responsible for managing Premium Bonds.

How long does it take to receive the money after cashing in my Premium Bonds? 

If you request a withdrawal online or by phone, the funds are usually transferred to your nominated bank account within eight working days. Postal requests may take up to two weeks. 

Can I cash in my Premium Bonds at a post office or bank branch? 

No, Premium Bonds can only be cashed in directly through NS&I. However, if you have won a prize and wish to cash it in, you can do so at selected post offices or bank branches displaying the NS&I logo.

NS&I offers online and phone services that allow bondholders to manage their Premium Bonds, including cashing them in, checking prizes, and updating personal details. These services provide a convenient and efficient way to cash in bonds without the need to visit a post office or bank branch.

Will I lose unclaimed prizes if I cash in my Premium Bonds? 

You won't lose any unclaimed prizes if you cash in your Premium Bonds. Any prizes you have won but not yet claimed will be paid to you before your bonds are cashed in.

Are there any fees or charges for cashing in my Premium Bonds? 

There are no fees or charges for cashing in your Premium Bonds.

They are also free from Capital Gains Tax, Stamp Duty, and Income Tax, and do not count towards your personal savings allowance. 

You should receive the full value of your bonds without any deductions.

Can I cash in Premium Bonds held in the name of someone who has died?

Yes, you can cash in Premium Bonds held in the name of someone who has died, but the process for doing so may vary depending on the specific circumstances.

Do Premium Bonds pass to next of kin?

Premium Bonds do not automatically pass to the next of kin upon the death of the bondholder.

Instead, they become part of the deceased individual's estate and are subject to the terms of their will (if they have one) or the laws of intestacy if there is no will in place.

Do you need probate to cash in Premium Bonds? 

If the Premium Bonds are solely owned by the deceased and the value of their estate exceeds a certain threshold, probate may be required.

If probate is required to administer the deceased's estate, the executor or administrator may need to include the Premium Bonds as part of the estate's assets. In such cases, probate may be necessary to provide legal authority to cash in the bonds and distribute the proceeds according to the terms of the will or the laws of intestacy.

If the Premium Bonds are jointly owned, the surviving owner may be able to cash them in without the need for probate.

How do you cash in Premium Bonds after probate? 

If you are the executor or administrator of the deceased’s estate, you must first get a Grant of Probate to confirm your authority to administer the estate, including any Premium Bonds. 

Once you have obtained the Grant of Probate, you should notify NS&I about the death of the bondholder and your authority to act on behalf of the estate. NS&I will provide you with the necessary forms and guidance for cashing in the Premium Bonds. 

The funds from the cashed-in Premium Bonds will be transferred to the estate’s nominated bank account or distributed according to the instructions provided. 

Do Premium Bonds count for Inheritance Tax?

The value of Premium Bonds held by the deceased at the time of death is typically included in their estate for Inheritance Tax purposes.

This means that the total value of the bonds is added to the overall value of the estate when calculating any potential inheritance tax liability.

Therefore, if the total value of the deceased's estate, including any Premium Bonds, exceeds the nil-rate band threshold, inheritance tax may be due on the amount above this threshold.

Can I reinvest the money from my cashed-in Premium Bonds into another savings product? 

Yes, once you have cashed in your Premium Bonds, you can choose to reinvest the money into another savings product or investment opportunity of your choice. 

Can I cash in my Premium Bonds if they are held jointly with someone else? 

If your Premium Bonds are held jointly with someone else, you can still cash them in. However, both bondholders must agree to the cash-in request, and the funds will be paid into a nominated bank account held in both names.

Overall, cashing in your Premium Bonds is a straightforward process that can be done through National Savings and Investments (NS&I) online, by phone, or by post. There are no fees or charges for cashing in your bonds, and any unclaimed prizes will be paid to you before your bonds are cashed in.

However, if you are the executor or administrator of an estate and have any questions regarding probate to cash in Premium Bonds, our network of specialist lawyers is on hand to help. Contact us today for more information


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