Premium Bonds Prize Fund Cut: premium bonds prize fund cut makes jackpots rarer
The premium bonds prize fund cut will see the prize rate fall from 3. 6% to 3. 3% from the April 2026 draw, and the odds of a single £1 bond winning will change from 22, 000 to 1 to 23, 000 to 1. The Treasury-backed National Savings and Investments (NS&I) says the move alters the mix of prizes and reduces the number of higher-value awards.
Premium Bonds Prize Fund Cut impact
NS&I will reduce the prize-fund rate to 3. 3% from the April 2026 draw, down from 3. 60% in place since August 2025. The prize rate — NS&I’s closest equivalent to an interest rate — peaked at 4. 65% in late 2023 and was 3. 60% since August 2025 before the change. The rate is variable and can shift in response to the wider savings market or the Bank of England base rate. The 3. 3% figure is described as an average, meaning most savers will experience returns far below this level.
Odds and prize numbers
Alongside the prize rate change, NS&I will lengthen the odds of any single £1 bond winning a prize from one in 22, 000 to one in 23, 000 from April. The latest adjustments will reduce the number of higher-value prizes: the number of £100, 000 prizes will fall from 78 in the most recent draw to an estimated 71 in April; there will be 143 prizes worth £50, 000, down from 154; and 285 prizes worth £25, 000, compared with 311 in February.
What changes for savers
NS&I notes Premium Bonds remain the UK’s most popular savings account and that the product recently passed £40bn in prizes drawn since their launch in November 1956. Instead of paying interest, Premium Bonds enter each £1 bond purchased into a monthly draw funded by an annual prize fund rate, with prizes ranging from £25 to £1m. Individuals can hold up to £50, 000 in Premium Bonds, including children under the age of 16, and new purchases must be held for one full calendar month before being eligible for entry into the monthly prize draw.
Recent payout totals and ERNIE
In 2025, NS&I paid out over £4. 95bn across 71. 7 million prizes. December 2025 was particularly busy for ERNIE, the Electronic Random Number Indicator Equipment used to generate the winning numbers for the monthly Premium Bonds prize draw: that month generated over 6. 1 million prizes worth £403. 8m. These totals illustrate the scale of payouts even as the prize-fund rate and odds change.
Tax, ISAs and interest comparisons
Premium Bond prizes are tax-free. By contrast, regular savings interest is taxable but benefits from the personal savings allowance (PSA): basic 20% rate taxpayers do not pay tax on the first £1, 000 a year of interest; higher 40% rate taxpayers do not pay tax on the first £500 a year of interest; top 45% rate taxpayers pay tax on all interest. With a top standard non-ISA easy-access rate cited at 4. 5%, that would be £45 in interest a year for every £1, 000 saved. At that 4. 5% rate, it takes just over £22, 222 in savings for basic-rate taxpayers to exceed the PSA and just over £11, 111 for higher-rate taxpayers. The top easy-access cash ISA rate is cited at 4. 4% and the annual ISA allowance is stated as £20, 000. Because Premium Bond prizes are tax-free, the product may still suit savers who have larger cash holdings, have maxed out the £20, 000 a year ISA allowance and who accept the random nature of the returns.
NS&I retail director Andrew Westhead said: “This change to the Premium Bonds prize fund rate and odds reflects changes in the wider savings market, and ensures we continue to balance the interests of savers, taxpayers and the wider financial services sector. ”
How likely is a windfall?
The guidance in the announcements stresses that most people with typical luck will not achieve the headline prize rate of 3. 6% or 3. 3%, even with the maximum £50, 000 invested, and that the chance of a very large prize is negligible. An example in the available text about investing £1, 000 that begins "you’d have to wait around 3, 500 y" is cut off and unclear in the provided context.
The prize-fund rate has been adjusted before: the odds were last adjusted in December 2024 and the prize fund rate was last changed in August 2025. A series of reductions the previous year took the prize-fund rate from 4% in January to 3. 6% by August. These shifts, together with the move from one in 22, 000 to one in 23, 000 odds and the reduced counts of higher-value prizes, mark a double hit for savers: both the headline prize-rate and the chance of winning are reduced.
For savers weighing options, the changes change the balance between the chance-based appeal of Premium Bonds and guaranteed interest on standard savings or ISAs; the numbers and tax rules above describe the trade-offs.
Closing: The premium bonds prize fund cut will take effect from the April 2026 draw, lowering the prize rate to 3. 3% and lengthening the odds to one in 23, 000, with fewer high-value prizes available and broader implications for savers' expected returns.
