National Savings and Investments (NS&I) is one of the most unusual financial institutions in the world. It is a UK government agency that raises retail finance for the government by offering savings products backed by the full faith of HM Treasury. If NS&I fails to pay, the UK government has failed — a risk that, while not literally impossible, is in practice negligible for the vast majority of planning purposes.
Among NS&I's products, the Premium Bond is the most famous. It has been part of British financial culture since 1956. For British expats who held Premium Bonds before they moved abroad, understanding the rules, the prizes, and the tax treatment is worthwhile. For those considering whether bonds belong in an international portfolio, this guide provides an honest assessment.
How Premium Bonds work
Each £1 of Premium Bonds held represents one entry into NS&I's monthly prize draw. The draw is conducted by ERNIE — the Electronic Random Number Indicator Equipment — which randomly selects winning bond numbers from the pool of all eligible bonds.
Prizes range from £25 to £1 million. The top prizes (£1 million: two per month; £100,000: several per month) represent the lottery element that makes Premium Bonds culturally distinctive. The majority of prizes are in the £25–£500 range.
The odds of any individual £1 bond winning in any given month are 23,000 to 1 (June 2026 draw; the odds shorten to 22,000 to 1 from the July 2026 draw). For a £50,000 maximum holding, this translates to roughly 2–3 prizes per year statistically, though actual experience varies enormously. Some £50,000 holders win many times; others win rarely.
NS&I adjusts the overall prize fund rate periodically. This rate determines the total value of prizes distributed in a given month as a percentage of all eligible bonds. As of the June 2026 draw, the prize fund rate is 3.3%, having been trimmed over 2025–2026 from the higher levels seen in 2023–2024; NS&I has announced an increase to 3.8% from the July 2026 draw. This does not mean every holder earns 3.3% — it means that, on average across all bondholders, the prize fund equals 3.3% of bonds held. Individual outcomes vary significantly by chance.
NS&I and non-residents: the current position
NS&I's terms are explicit: new applications for Premium Bonds are not available to non-UK residents. If you currently live outside the UK, you cannot open a new Premium Bond account, increase your existing holding, or open bonds for a child.
However, existing bondholders who move abroad can generally retain their bonds. NS&I does not typically close existing accounts simply because the holder has moved overseas. The bonds continue to be entered into monthly draws, and prizes are paid to the registered bank account.
Practically, this means:
- If you held £50,000 of Premium Bonds before emigrating, you can keep them
- You cannot add to the holding
- You should ensure your registered bank account for prize payments is one that will remain accessible — ideally a specialist non-resident account or an account that accepts international transfers
- Update your correspondence address with NS&I for prize notifications
NS&I periodically reviews its terms for non-resident holders, so it is worth checking the current position directly with NS&I if you are considering a long-term move.
The tax treatment for expats
In the United Kingdom, Premium Bond prizes are entirely exempt from income tax and capital gains tax. This is established by statute and applies to UK residents without qualification.
Once you are no longer resident in the UK for tax purposes, the tax treatment of prizes depends on the laws of your new country of tax residence:
Most common outcome: many countries treat lottery and prize winnings differently from investment income, often exempting them from tax or taxing them at lower rates. In these jurisdictions, Premium Bond prizes remain relatively tax-efficient even for non-residents.
Countries that tax UK source income comprehensively: some countries tax their residents on all income wherever it arises, including UK-source income. The prize technically arises in the UK (from a UK government body). Whether this is treated as income, investment income, or a prize depends on local classification.
Double Tax Agreement (DTA) impact: the UK has DTAs with most countries where British expats commonly live. These agreements allocate taxing rights between countries. For savings income and interest, the DTA typically allows the UK to tax the income but credits UK tax against the foreign tax liability. However, since UK tax on Premium Bond prizes is nil, there is no UK tax credit to set off against foreign tax, meaning foreign tax liability is not reduced by a UK credit.
The practical advice is to take local tax advice in your country of residence specifically about the treatment of UK lottery and prize income. In the UAE and other Gulf states with no personal income tax, this question does not arise.
Are Premium Bonds worth holding for expats?
The case for retaining existing Premium Bonds as an expat:
Capital security: the capital is guaranteed by HM Treasury. There is no credit risk. Unlike a bank deposit (which is protected up to £120,000 by the FSCS since 1 December 2025, with amounts above that bearing bank counterparty risk), Premium Bonds are backed by the UK government directly with no limit.
Tax-free prizes in the UK: for expats who retain any UK tax obligations (for example, a UK tax year still in progress), the prizes remain UK-tax-free.
Liquidity: bonds can be redeemed at any time. There is no lock-in, no penalty for early withdrawal. The capital plus any unclaimed prizes are returned within a few days of a redemption request.
Psychological value: for British expats maintaining a connection to the UK financial system, keeping Premium Bonds alongside a UK bank account and UK pension provides a degree of ongoing engagement with UK finances.
The case against:
The £50,000 ceiling: for HNW clients with significant investable assets, the maximum £50,000 holding limits Premium Bonds to a small fraction of the portfolio. The planning value is limited.
No new contributions: since non-residents cannot increase their holding, existing bonds either maintain their value (inflation erodes the real return over time) or are redeemed when needed.
The prize rate uncertainty: the prize fund rate is not guaranteed. NS&I adjusts it in line with market rates. During periods of low interest rates (2010–2021), the prize fund rate fell to 1–1.5%, making Premium Bonds less competitive against conventional savings.
Better capital-secure options may exist offshore: for internationally mobile investors, other capital-secure offshore options (Isle of Man deposits, Jersey fixed-rate bonds) may offer comparable or better returns with more certainty and within an offshore structure better suited to their tax situation.
NS&I products beyond Premium Bonds
NS&I offers several other products that are generally not available to non-residents for new applications:
Income Bonds: monthly interest payments; currently not available to non-UK residents for new applications.
Direct Saver: an online savings account; restricted to UK residents for new applications.
Guaranteed Income Bonds / Growth Bonds: fixed-term products; restricted to UK residents.
NS&I Junior ISA: ISAs are only available to UK residents.
The general rule is that NS&I products are for UK residents. If you hold existing products from before your move, retain them (checking the current terms) but do not expect to add to them or access new products from overseas.
How Global Investments can help
Global Investments advises internationally mobile HNW individuals on the full picture of their savings and capital protection strategy — UK-based and offshore. Premium Bonds are one element of a capital-secure UK financial footprint for British expats, but they should be considered alongside Isle of Man deposits, Channel Islands fixed-rate accounts, and the broader offshore savings strategy appropriate to your tax residency.
If you are a British national planning a move abroad, or already living overseas and reviewing your UK financial arrangements, speak to our team about the options that genuinely fit your situation. We work with specialists in NS&I products, offshore capital protection, and the interaction with non-dom and expat tax status.
This guide reflects our understanding of NS&I policies and prize fund rates as of June 2026. NS&I policies change; verify current terms directly with NS&I before making decisions. Tax treatment of prizes in non-UK jurisdictions varies — seek local tax advice.
Frequently Asked Questions
This guide is for general information only and does not constitute financial advice or a personal recommendation. Banking regulations, tax rules, and product availability change — always verify current rules and seek advice from a qualified independent financial adviser or regulated banking specialist before making any decisions. The value of investments can fall as well as rise and you may get back less than you invest.