This change will see the number of £5,000, £10,000, £25,000, £50,000, and £100,000 prizes almost double. There will also be nineteen times as many £50 and £100 prizes, paid out from October.
Premium Bonds are held by over 21 million people in the UK. Instead of earning interest, bond holders are entered into a monthly prize draw for tax-free cash prizes, which range in value from £25 to £1million.
Essentially, each £1 invested in Premium Bonds equates to one entry in the prize draw, but the minimum investment level is £25 and you can keep buying bonds until you reach the maximum holding level of £50,000. Although winning a large cash prize may seem appealing, savers could equally win nothing.
Savers can choose to cash-in all, or just a portion of their bonds, giving them immediate access to funds, if required. There is no penalty for cashing bonds in.
Premium Bonds can be purchased for children under the age of 16. Until the child reaches 16 years old, the parent/guardian named on the application looks after the bonds, regardless of who bought them.
Premium Bonds are more popular than ever, prizes are free of UK Income Tax and Capital Gains Tax and offer both the inexperienced and experienced investor the security of a government-backed savings account.