Premium Bonds
Premium Bonds prize fund rate: what 4.35 % is worth in your tax band
Enter your Bonds and your other income. The tool finds the rate a taxable account would have to pay to leave you, after tax, what the prize fund average and the median year bring.
The taxable rate that matches Premium Bonds for you
Taxable rate matching the median, 2027/28
5.26 %
| Matching the prize fund average | 6.29 % |
| Median prizes in a year | £1,125 |
| Average prizes in a year | £1,305 |
Most holders get less than the average, because the large prizes are rare. Prizes are tax free.
The prize fund rate of Premium Bonds, 4.35 % a year since NS&I raised it from 3.3 %, is the total value of prizes paid each month, multiplied by twelve and divided by all the Bonds in the draw (NS&I, Premium Bonds). It is an average across about 137 billion Bonds, not a rate paid to anyone: no holder is credited 4.35 %, and the typical holder wins less because a few large prizes take a share of the fund. Prizes are free of income tax, so the rate is often compared with a taxable account. For £30,000 of Bonds, a taxable account would need about 4.64 % to match the average after 2027/28 tax for someone on £40,000, and about 6.29 % for someone on £60,000, whose Personal Savings Allowance is £500 and whose interest beyond it is taxed at 42 %. Measured against the median year, the matching rates are lower.
Sums checked by Radif Partners · Editorial policy · How the sums are done
Where the 4.35 % comes from
The published figures let anyone check the rate. In October 2026 the draw paid 6,546,849 prizes worth £498,378,775 (NS&I, monthly prize allocation). There is one prize for every 21,000 Bonds, so the draw held about 138 billion of them. Twelve months of that fund, divided by the Bonds, gives 4.35 %, which is the published rate once rounding is allowed for. The rate is therefore a size of prize fund, and both it and the odds are variable.
The rise from 3.3 % to 4.35 % adds about £10 a year to the average for each £1,000 held. NS&I's own pages are not consistent about the first draw at the new rate, so this site does not state a start month.
| Holding | Average at 3.3 % | Average at 4.35 % | Difference a year |
|---|---|---|---|
| £10,000 | £330 | £435 | £105 |
| £30,000 | £990 | £1,305 | £315 |
| £50,000 | £1,650 | £2,175 | £525 |
The taxable rate that matches it, band by band
To compare like with like, the tool asks what rate a taxable account would need so that the interest left after income tax equals the prizes. The answer depends on income, because the Personal Allowance, the £5,000 starting rate and the Personal Savings Allowance shelter different amounts of interest at different incomes, and the rate on the rest rises in 2027/28 under section 5 of the Finance Act 2026. The table works it out for £30,000 of Bonds.
| Other income | Matches average, 2026/27 | Matches average, 2027/28 | Matches median year, 2027/28 |
|---|---|---|---|
| £15,000 | 4.35 % | 4.35 % | 3.75 % |
| £40,000 | 4.60 % | 4.64 % | 3.87 % |
| £47,000 | 4.60 % | 4.64 % | 3.87 % |
| £60,000 | 6.14 % | 6.29 % | 5.26 % |
| £110,000 | 9.21 % | 9.60 % | 8.02 % |
| £130,000 | 7.91 % | 8.21 % | 7.08 % |
Three groups appear. At £15,000 the interest on £30,000 is largely covered by the starting rate and the allowance, so the matching rate stays close to the prize figure. Basic rate taxpayers need a little more, because £30,000 at that rate earns more than the £1,000 allowance (Income Tax Act 2007, section 12B). Higher rate taxpayers need much more. At £110,000, interest also eats into the Personal Allowance, and the page on income between £100,000 and £125,140 explains why the matching rate there is the highest in the table.
Reading the result with care
A matching rate is a way to put two different products on one scale, not a recommendation. It assumes the current prize fund rate lasts a full year, which is not promised, and the median column is a simulated middle result, not a floor. Savings accounts carry their own variable rates. The Premium Bonds calculator shows the full spread from a lean year to a lucky one, and the page on the 2027/28 savings rates shows how much more tax interest attracts from 6 April 2027.