Assets are generally sold or encashed during the administration period, although some can be transferred to beneficiaries who wish to keep the holding. With Premium Bonds however, there is no option to transfer them.
What happens to someone's Premium Bonds when they die? Unlike most other assets, Premium Bonds cannot simply be passed on to beneficiaries of the estate, as they cannot be transferred into someone else's name.
If the deceased's Premium Bonds stay in the draw, which they can for up to 12 months (instead of being repaid), who will receive any prizes won? Once we've been told of the customer's death, any prizes won will be paid by warrant (like a cheque) to the person entitled to the money after we've completed the claim.
If the premium bond transfer is for your child, the account must be in the child's name, and you must be the parent or legal guardian responsible for the account. You can fill out an online form or send NS&I the necessary information via post.
Premium bonds cannot be held jointly with another person. Additionally, premium bonds cannot be nominated to pass to a beneficiary when a person dies.
Dealing with Premium Bonds after someone's death
Assets are generally sold or encashed during the administration period, although some can be transferred to beneficiaries who wish to keep the holding.
No individual can legally own more than £50,000 of Premium Bonds. Premium Bonds work in a similar way to a lottery draw. Each £1 held as a Premium Bond is given a unique number which is entered into a prize draw.
On average, even with 50,000 bonds, you would wait 99,450 years before having an even chance of winning one. In the two hundred millennia since Homo sapiens first appeared, you might have expected two.
The Executor can trace and claim Premium Bonds belonging to the deceased either online or by post. If applying by post, they must include a copy of the death certificate and the Will. If applying online, the Executor must complete a bereavement claim form.
Are EE and I Bonds transferable? Yes. The owner can transfer EE and I Bonds to another person with a TreasuryDirect account; however, you must wait five business days after the purchase date to transfer the bonds.
The prizes themselves are tax-free, meaning the Premium Bonds holders won't need to worry about paying tax on them. That said, it could be a different story when it comes to Inheritance Tax. Premium Bonds are subject to Inheritance Tax, and need to be declared as part of the estate for probate.
You cannot cash them. You can only cash bonds that you own or co-own unless you have legal evidence or other documentation that we accept to show you are entitled to cash the bond. How do I know how much my bond is worth? Use our Savings Bond Calculator.
Are my old Premium Bonds still valid? Yes. As long as you haven't cashed your Bonds in, they're still valid and they're still being entered into our monthly prize draws.
Series EE and I
Once in your TreasuryDirect account, the bond will be registered in your name alone. You can then add either a secondary owner or beneficiary. Once you have a TreasuryDirect account, you can convert other paper bonds you own to electronic bonds.
You can cash in your Bond at the end of the 3-year term with no penalty. You can also cash in before that, but we will deduct a penalty from your payment equivalent to 90 days' interest on the amount cashed in.
Anyone aged 16 or over can buy Premium Bonds. Parents, legal guardians and (great) grandparents can invest on behalf of their child or grandchild aged under 16.
On the death of the last surviving policyholder, the bond can be inherited by a beneficiary of the policyholder's estate. There won't be any income tax to pay until the bond is surrendered or the last life assured dies but its value could be chargeable to inheritance tax.
All premium bonds are issued by the UK government and can be purchased online, over the phone or by filling out a paper application and sending it by post. This can be done on the NS&I website here. When it comes to the number of premium bonds that investors can buy, the answer is 50,000.
Bond Premiums and Interest Rates
As interest rates fall, bond prices rise while conversely, rising interest rates lead to falling bond prices. Most bonds are fixed-rate instruments meaning that the interest paid will never change over the life of the bond.
In the past 12 months, the average holding of the 24 people to win the top prize has been £34,876. Nine of these winners — or just over a third — had the maximum £50,000 invested. However, one winner scooped the jackpot in February with just a £3,000 holding. In January, someone won the top prize with £4,625.
Disadvantage: Low odds:
While the calculations necessary for working out how likely you are to win are very complicated, it is currently estimated that the chance of winning any value of prize is 1 in 24,500, for each individual Bond held.
In January 2023 NS&I announced an additional Premium Bond prize rate increase was to take effect at the start of February. The prize rate is now 3.15% and the chances of a win at the monthly draw are 1 in 24,000.
$10,000 limit: Up to $10,000 of I bonds can be purchased, per person (or entity), per year. A married couple can each purchase $10,000 per year ($20,000 per year total). 7.12% interest: The yield on I bonds has two components—a fixed rate and an inflation rate.
The maximum Premium Bond holding is £50,000 and there do not appear to be any current plans to increase this limit. All investments are effectively government-backed, so all money put into PBs is secure. A married couple or civil partners may invest a sizeable £100,000 between them.
Family Ties. The limit is per person — so if you're married, each spouse is allowed to purchase $10,000 in I bonds (plus the paper bonds if they have a tax return). You can also purchase up to $10,000 in I Bonds for your children, but they must be used for the child, to save for college, perhaps.