Premium Bonds Calculator 2026: Your Likely Prize Return

Estimate your likely prize return

Enter your bond holding and the latest NS&I prize fund rate into the Premium Bonds calculator above. It returns an estimate of your likely annual prize money and the odds attached to each bond, so you can weigh the appeal of tax-free prizes against the more predictable return of a standard savings account.

What Premium Bonds actually are

Premium Bonds are a savings product from National Savings & Investments (NS&I), which is backed by HM Treasury. That government backing means every penny you put in is 100% secure - there's no risk of losing your capital, unlike with shares or funds. You can buy bonds in £1 units, with a minimum purchase of £25 and a maximum total holding of £50,000 per person.

The twist is that Premium Bonds pay no interest at all. Instead, the interest that would normally be paid out is pooled into a prize fund, and that fund is shared out each month as tax-free prizes ranging from £25 up to £1 million. Each whole £1 you hold is one entry, with its own unique bond number, in every monthly draw. Hold £1,000 and you have 1,000 separate chances each month; hold the £50,000 maximum and you have 50,000 chances.

Because your return depends on which bond numbers get drawn, two people holding identical amounts can have wildly different years. One might win nothing for months; another might land a few £25 prizes and the occasional £100. Over a long period, holdings tend to drift towards the average, but in any single year luck plays a large part.

How the prize draw works

Every month, a machine NS&I calls ERNIE (Electronic Random Number Indicator Equipment) generates random numbers and matches them against eligible bonds. To be in a given month's draw, a bond must have been held for a full calendar month after the month you bought it - so bonds bought in March are first entered in the May draw, for example.

The prize fund is built around two figures NS&I publishes and changes from time to time:

• The prize fund rate - an annual percentage representing the total prize pot as a share of all money held in Premium Bonds. It is not a rate you personally earn; it's the size of the whole prize pool expressed as a percentage. NS&I adjusts it up or down in response to the wider savings market, so always check the current figure before you rely on an estimate.
• The odds - the chance of any single £1 bond winning a prize in a given month, usually quoted as something like "X to 1". A lower number means better odds per bond.

Both of these are set by NS&I rather than by you, and both can move when the Bank of England changes base rate or when NS&I needs to hit its fundraising targets. That's why this Premium Bonds calculator asks you to enter the current rate rather than assuming a fixed one.

How the Premium Bonds calculator works

The calculator estimates the average outcome - the return you'd expect over the long run if your luck were perfectly typical. The plain-English formula is:

Expected annual prize money = Your holding × Prize fund rate

So if the prize fund rate is, say, 4% and you hold £20,000, the maths is:

• £20,000 × 4% = £800 in expected prizes over a year.

That £800 is an average, not a promise. The prize fund rate is a mean across all bondholders, and prizes only come in whole chunks (£25 minimum). A smaller holder is statistically more likely to land below the average because they have fewer entries to smooth out their luck, while large holders tend to track the average more closely. The calculator can also translate your holding into your monthly odds of winning at least one prize, using the published per-bond odds, so you get both the money view and the probability view.

A realistic way to read the result: treat the expected figure as the centre of a range. In a poor year you might win noticeably less; in a lucky year, more. Unlike a savings account, there's a real chance of winning nothing in a given month - and an equally real, if tiny, chance of a life-changing prize.

Worked example: Priya weighs £25,000 in Premium Bonds

Priya, a teacher in Leeds, has £25,000 sitting in an account paying very little and is tempted by tax-free prizes. She wants to know what's realistic before she moves the money. Suppose the current prize fund rate is 4%.

• Holding: £25,000 = 25,000 individual bond entries each month.
• Expected annual return: £25,000 × 4% = £1,000 over a year, on average.
• What that really means: because the smallest prize is £25, that £1,000 average translates roughly to landing a handful of £25 prizes most months, with the occasional larger one. A run of empty months is entirely possible.

Now compare a smaller holder. Tom keeps £1,000 in Premium Bonds. At the same 4% rate his expected annual return is £1,000 × 4% = £40. But £40 is well below the cost of even two £25 prizes spread across a year, so in practice Tom may go many months with nothing and is statistically likely to win less than the headline average suggests. Small holdings are where the gap between "expected" and "typical" is widest.

For Priya, the decision comes down to whether tax-free certainty of return matters more than predictability. If she's a higher-rate taxpayer who has already used her Personal Savings Allowance, the tax-free nature of any prizes is genuinely valuable - more on that below.

Premium Bonds vs a regular savings account

The honest comparison is between a guaranteed interest rate on a savings account and an average expected return on Premium Bonds that you might beat or fall short of. To compare fairly, line the prize fund rate up against the after-tax interest rate of a savings account, because Premium Bond prizes are tax-free and savings interest often isn't.

That's where the Personal Savings Allowance (PSA) matters. For 2026/27 the PSA lets you earn tax-free savings interest of:

Source: gov.uk - tax-free interest on savings. If your savings interest stays within your PSA, a regular account's headline rate is effectively its after-tax rate, so you can compare it directly to the prize fund rate. Once you breach the allowance, the comparison tilts towards Premium Bonds: a basic-rate taxpayer loses 20% of the interest above £1,000, a higher-rate taxpayer 40% of interest above £500, while every Premium Bond prize stays whole.

For a quick like-for-like figure on the savings side, our savings calculator and interest calculator will show the gross and after-tax interest a fixed rate would produce, so you can hold that number up against the expected prize return shown here.

Are Premium Bond prizes tax-free?

Yes. Every prize, from £25 to the £1 million jackpot, is completely free of UK Income Tax and Capital Gains Tax. There is nothing to declare on a Self Assessment return, and prizes don't count towards your Personal Savings Allowance or push you into a higher tax band. This is one of the strongest arguments for holding Premium Bonds - especially if you're an additional-rate taxpayer with a £0 PSA, or a higher earner whose savings interest already exceeds the allowance.

It's worth noting that Premium Bonds and a Cash ISA do similar jobs in different ways: both shelter your return from tax. An ISA calculator can show what a tax-free ISA at a fixed rate would return, which is a useful second comparison alongside the prize estimate. The £20,000 annual ISA allowance and the £50,000 Premium Bonds limit are separate, so many people use both.

Things to watch and common mistakes

Premium Bonds are simple to buy but easy to misjudge. These are the points people most often get wrong:

• Treating the prize fund rate as a rate you'll earn. It's an average across all bondholders. Most people - particularly those with smaller holdings - win less than the headline rate implies, because prizes come in £25 lumps and a few large jackpots pull the average up.
• Forgetting inflation. If your prizes don't keep pace with rising prices, the real value of your £50,000 quietly erodes. Run your holding through an inflation calculator to see whether your expected tax-free return is actually beating inflation or just standing still.
• Expecting prizes immediately. A bond bought this month isn't entered until it has been held for a full calendar month afterwards, so your first possible draw is two months out.
• Holding too little for it to make sense. With a small holding, the odds mean long dry spells are normal. If you want a dependable, regular return on a modest sum, a savings account may suit you better than the lottery-style payout of Premium Bonds.
• Assuming the rate is fixed. NS&I changes the prize fund rate and odds periodically. A figure that looked competitive last year may not be today - always re-check the current rate before deciding, and re-run this calculator if it moves.
• Not nominating winnings to be paid automatically. Set prizes to be paid straight to your bank account or reinvested (up to the £50,000 limit), so you don't miss out or let unclaimed prizes sit idle. There are millions of pounds in unclaimed Premium Bond prizes.

Is the calculator UK-wide?

Premium Bonds are a single UK-wide NS&I product, so the prize draw, odds and £50,000 limit are identical whether you live in England, Scotland, Wales or Northern Ireland. Because the prizes are entirely tax-free, there are no regional tax differences to apply - Scotland's separate income tax bands, for instance, are irrelevant to Premium Bond winnings. The only figure that varies is the NS&I prize fund rate over time, which applies equally across the whole UK.

You can check the official product details, current rate and odds directly at NS&I - Premium Bonds before you commit any money.

This Premium Bonds calculator gives estimates for general guidance only and is not personal tax or financial advice. Prize outcomes are based on probability and the NS&I prize fund rate, both of which can change.

Who should use this calculator

Premium Bonds pay no interest. Instead the prize fund is distributed by monthly draw, and the advertised rate is what a holder with average luck might expect over time — not what you will get. This calculator projects a typical outcome for your holding and compares it against an ordinary savings account after tax, which is the comparison that actually decides whether they are worth holding.

The comparison turns on your tax position. Prizes are entirely tax-free, so the higher your tax band, the better Premium Bonds look against taxable savings interest. For a higher-rate taxpayer whose Personal Savings Allowance is already used up, the effective comparison is very different from a non-taxpayer’s.

What this calculator assumes

• You hold up to the £50,000 maximum, and every £1 bond has an equal chance in each monthly draw.
• The projection uses the current prize-fund rate applied as an average return — a statistical expectation, not a promise.
• Prizes are free of Income Tax and Capital Gains Tax.
• The savings comparison applies your selected tax band to the interest, since savings interest above the Personal Savings Allowance is taxable.
• Bonds must be held a full calendar month before entering their first draw.

Limitations — what it does not cover

• Actual luck. The median holder does worse than the advertised rate, because a small number of very large prizes pull the average up. Most people with a modest holding win less than the headline rate suggests.
• Small holdings. With a few hundred pounds invested, the most likely annual outcome is no prizes at all.
• Changes to the prize fund rate, which NS&I adjusts regularly.
• Inflation. Capital is secure in cash terms but loses purchasing power over time.
• Your Personal Savings Allowance and Starting Rate for Savings, which may mean some savings interest is already tax-free.
• Prize draw mechanics beyond the average — this is not a simulation of your individual odds.

Related calculators

To build the full picture around your savings, try our savings calculator to model a fixed-rate account, the ISA calculator for a tax-free comparison, the interest calculator to work out gross and net interest, and the inflation calculator to check whether your expected return holds its real value over time.