Premium Bonds cut to 3.3% and odds worsened from April — fewer big prizes, what savers need to know

NS&I will cut the Premium Bonds prize-fund rate to 3. 3% (from 3. 6%) for the April draw and beyond, and the odds of any single bond winning a prize will worsen from 1 in 22, 000 to 1 in 23, 000; these moves mean premium bonds will offer fewer chances of winning large tax-free prizes and change the expected prize profile for holders.

Premium Bonds: the headline changes for April

The prize-fund rate is being reduced to 3. 3% from 3. 6%, and the odds on each bond have been lengthened to 1 in 23, 000 from 1 in 22, 000. The odds had been the same since December 2024. This latest cut follows a series of reductions last year that took the prize-fund rate from 4% in January to 3. 6% by August.

Prize counts and how the April draw will differ

There will be fewer big-money prizes in the April draw and an overall slight reduction in total prizes. Key estimated changes from February to April:

• Estimated £1 million prizes: unchanged at 2 in April.
• Estimated £100, 000 prizes: fall to 71 in April from 78 in February.
• Estimated £50, 000 prizes: fall to 143 in April from 154 in February.
• Estimated £25, 000 prizes: fall to around 284 in April from 311 in February.
• Estimated £10, 000 prizes: fall to 712 in April from 777 in February.
• Estimated £25 prizes: rise to around 2, 806, 003 in April from 2, 643, 007 in February.
• Total number of prizes: expected to be around 5, 943, 029 in April, down from 6, 183, 066 in February.

The April draw is expected to have close to six million tax-free prizes worth around £375 million in total, and Premium Bonds have recently passed £40 billion in prizes drawn since launch.

Why NS&I is changing the prize fund and odds

NS&I is backed by the Treasury and has a duty to balance the interests of savers, taxpayers and the wider market; it is set targets for the amount of net finance it needs to raise each year for government. NS&I retail director Andrew Westhead described the change as reflecting shifts in the wider savings market and as a way to balance those interests, and he reiterated that Premium Bonds remain the most popular UK savings account. The Bank of England base rate was reduced in December, and further reductions are expected.

How Premium Bonds work and practical limits

Premium Bonds operate as a savings product where each £1 bond purchased is entered into a monthly draw for tax-free prizes that range from £25 to £1 million; instead of paying interest, the scheme uses an annual prize-fund rate to fund those monthly draws. People can hold up to £50, 000 in Premium Bonds, including those aged under 16.

Who may still favour Premium Bonds and who will likely prefer standard savings

Most people with typical luck will not get a return equal to the headline prize-fund rate (3. 6% or the reduced 3. 3%), even with the maximum £50, 000 invested; the mechanics that produce that average return are complex and many savers will earn considerably less. For savers who prize certainty, accounts that pay interest now look more competitive: with a top easy-access standard (non-ISA) rate of 4. 5%, that yields £45 a year for every £1, 000 saved. Cash ISAs, which pay a top easy-access rate of 4. 4%, are slightly lower than the top non-ISA rate but are tax-free and offer a guaranteed return that is higher than the current Premium Bonds prize rate of 3. 6% (which most people would need luck to achieve).

Tax considerations and practical thresholds

Interest on normal savings is taxable as income, but each tax year savers receive a personal savings allowance (PSA): basic (20%) rate taxpayers do not pay tax on the first £1, 000 of interest; higher (40%) rate taxpayers do not pay tax on the first £500 of interest; top (45%) rate taxpayers pay tax on all interest. With the current top standard easy-access rate of 4. 5%, it takes just over £22, 222 in savings for basic-rate taxpayers to exceed the allowance and just over £11, 111 for higher-rate taxpayers. Premium Bond prizes are not taxed, and for savers who have larger cash balances, have maximised a £20, 000 a year ISA allowance and who would otherwise exceed their PSA, Premium Bonds may be a reasonable option if the holder accepts the random nature of returns. For other savers, cash ISAs or interest-paying accounts are likely to remain the better choice.

Recent updates indicate the April picture is set and prize counts have been adjusted; details may evolve with future draws.