Money Lesson Single

The nation's favourite lottery

Millions of people hold Premium Bonds and the advertised rate is not what most of them get. Here is what a full holding is typically worth against an ordinary savings account, once the taxman has had his share of one of them and none of the other.

Employment Expenses Savings Account Premium Bonds

Premium Bonds

2 Goals

The whole amount in Premium Bonds, at the typical rather than the headline return, prizes paid out to the bank.

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Employment Expenses Savings Account

A savings account

2 Goals

The same amount in an ordinary savings account, with the interest taxed at his own rate.

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Premium Bonds A savings account

At the full holding the typical Premium Bonds return sits a little below the advertised one, and for a higher rate taxpayer it still ends ~£5.6k ahead of a savings account, on the prize rate and the tax treatment together.