Savers who are hoping to have a chance of winning a £1 million jackpot each month, as well as other tax-free “prizes” – but aren’t looking for guaranteed returns from their investment – may opt for Premium Bonds. This way of saving is backed by the HM Treasury. The minimum investment amount is £25. And, when it comes to the odds, there’s a 24,500 to one chance of winning per Bond number, NS&I state.
Rather than interest per Bond number being paid out, the money is instead allocated to the winners of the monthly draw.
These “prizes” can range from £25, right up to the £1 million jackpot.
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.
The standard Inheritance Tax rate is, currently, 40 per cent.
It is only payable on the value of an estate – meaning property, money, and possessions – which exceeds a specified threshold.
The threshold is £325,000, however it may be that a person increases their threshold, such as having a deceased spouse or civil partner’s unused threshold, or by giving away one’s home to their children or grandchildren.
If a person leaves everything above the £325,000 threshold to their spouse, civil partner, a charity, or a community amateur sports club, then there is normally no Inheritance Tax to pay.
Can Premium Bonds be transferred after death?
NS&I offers guidance on what one should do with Premium Bonds following a bereavement.
It’s not possible to transfer Premium Bonds after the holder dies, the guide says.
This month’s winners of the Premium Bonds prize draw have been revealed.
NS&I unveiled some details about the two winners of the September 2019 £1 million jackpots.
Both male, the first person is from Surrey, while the other is from Hertfordshire.
The total number of prizes in September exceeded 3.3 million, with the prize fund this month amounting to more than £96 million.