Premium Bonds - Invest now

22 September 2008

Description and tax relief

1. Premium Savings Bonds Series B (“Bonds”) are a UK Government security issued in units of £1 under the National Loans Act 1968. They do not earn interest, but are included in draws for cash prizes. These prizes are free of all UK Income Tax and Capital Gains Tax.

2. Bonds are subject to the Premium Savings Bonds Regulations 1972 (Statutory Instrument Number: 1972/765) as amended or re-enacted from time to time (see paragraph 33). In the event of any differences between these terms and conditions and the Regulations, the Regulations will prevail.

Definitions

3. In these terms and conditions:
(a) “banking day” means a day (other than a Saturday, Sunday or bank holiday) on which banks are generally open for business in London, and, in relation to the processing of a payment, any other place of receipt;
(b) “Director” means the Director of Savings;
(c) “NS&I” means National Savings and Investments (formerly known as National Savings) operating through its Blackpool office or such other office as the Director may specify;
(d) “post office” means a branch of Post Office Ltd in the UK or of the postal authorities in the Channel Islands and Isle of Man;
(e) “the gazettes” means the London, Edinburgh and Belfast Gazettes.

Prize draws

4. There is a prize fund for each month which is equal to one month's interest on each Bond unit eligible for the prize draw for that month. The rate of interest is determined by the Treasury from time to time. The current rate has been published in the gazettes and any change in the rate will also be published in the gazettes. The current rate is also set out in our Interest Rates leaflet available at post offices and from NS&I, and on our website at www.nsandi.com.

5. The number of prizes in each month’s draw will be calculated by dividing the total number of Bond units eligible for that draw by a specified number (“the odds”) as follows:

The specified number is determined by the Treasury from time to time. The current specified number has been published in the gazettes and any change to the specified number will also be published in the gazettes. The current specified number is also set out in our Interest Rates leaflet available at post offices and from NS&I, and on our website at www.nsandi.com.

6. The prizes are divided into three value bands: higher, medium and lower. These are shown below with the individual prize values in the bands:

The percentage share of each month’s prize fund currently allocated to each band (subject to any adjustments required by paragraphs 7 to 10) is determined by the Treasury from time to time. The current percentage shares have been published in the gazettes and any change to them will also be published in the gazettes. The current percentage shares are also set out in our Interest Rates leaflet available at post offices and from NS&I, and on our website at www.nsandi.com.

7. Higher value band - The share allocated to this band is used to fund at least one £1,000,000 prize, and the balance is divided amongst the remaining prize values in equal shares. The number of £1,000,000 prizes is set out in our Interest Rates leaflet available at post offices and from NS&I, and on our website at www.nsandi.com. The number of remaining prizes of each value is calculated by dividing the amount of the share by the prize value. Any balance which is less than half the prize value is then carried forward to the calculation for the next lower prize value. If any balance of a share is at least half of the prize value, an additional prize of that value is awarded and the shortfall is taken from the allocation for the next prize value share. The £5,000 prizes are also calculated in this way with any surplus or shortfall being similarly carried to or from the share allocated to the medium value band. (But see paragraph 10.)

8. Medium value band - Prizes are calculated in the ratio of one £1,000 prize for every three £500 prizes. Any surplus is added to the share allocated to the lower value band. (But see paragraph 10.)

9. Lower value band - The distribution of £100 and £50 prizes is made on the basis of awarding the maximum number of £100 prizes consistent with the total number of prizes as calculated under paragraph 5. Any surplus is carried forward to the following month's draw.

10. In the event that the allocation of the monthly prize fund between the higher, medium and lower value prizes does not meet the cost of awarding the total number of prizes as calculated under paragraph 5 the Director may increase the share of the prize fund allocated to the lower value band at the expense of the higher and medium value bands to the extent necessary to ensure that the requisite total number of prizes is awarded.

Eligibility of Bonds for prizes

11. A Bond will be included in all draws in and from the second month after the month you buy it or where the Bond is purchased under an automatic prize reinvestment mandate (see paragraph 22) the month after you buy it, provided in each case that the Bond has not been repaid before the first day of that month.

12. After a Bond has qualified for its first draw it will be included in each draw, unless:
(a) it has been repaid before the first day of the month for which the draw is held; or
(b) the registered holder has died more than a year before the month for which the draw is held.

13. If a £1 Bond unit is drawn more than once in a draw it will be allocated the highest prize for which it is drawn.

14. Any Bond purchased in excess of the maximum holding limit of £30,000 will not be eligible for any draw until the holding has been reduced to not more than the maximum limit.

Publication and allotment of prizes

15. The serial numbers of winning Bonds are published on the NS&I website. The registered holders of winning Bonds will be notified by post at their last address as recorded at NS&I. For this reason it is important that you advise us of any change of address promptly.

16. The Director has sole discretion on all matters concerning the method and conduct of the draws and allotment of prizes. His decision as to which Bonds have won prizes is final.

Who may buy and hold Bonds

17. Bonds may only be held in the name of one individual person. You may only buy Bonds:
(a) for yourself if you are aged 16 years or over;
(b) for a child under 16 years if you are their parent, grandparent, great grandparent, or guardian; or
(c) on behalf of and in the name of a person who lacks capacity if you are his or her deputy with the power to make investments on his or her behalf (or other person duly authorised in that behalf).

18. Bonds are not transferable at any time. Following the death of a holder, the value of the Bonds will form part of the deceased holder’s estate.

How to buy Bonds

19. You may buy Bonds by applying via the internet, by telephone or by post to NS&I; or in person at any post office which carries out NS&I business. Where you apply via the internet or by telephone and this is your first purchase of bonds, you must confirm your application by signing and returning a confirmation form we will send you by post. In accepting the terms and conditions you are confirming that you, and anyone else named on the application, are aware that your and their identity and address will be checked as detailed in the Premium Bond brochure. We may also write to you requesting documentary evidence of your identity and address. The form and/or letter requesting evidence of identity will specify the time within which the signed form and/or evidence must be returned to NS&I. If the form and/or evidence is not received at NS&I within the specified time the Director will not be able to process your application. We will let you know if this is the case.  Where you apply at a post office, acceptance can only occur when the application is subsequently processed by NS&I. In all cases, an application to purchase is subject to acceptance by the Director.

20. If accepted, the date of purchase will be:
(a) for applications sent by post, the date your application and payment were received at NS&I;
(b) for applications via the internet, the date your on-line application, including authority for a debit card payment, were received at NS&I;
(c) for applications made by telephone, the first date by which NS&I took the details of your application, including authority for a debit card payment;
(d) for applications at a post office, the date your application and payment were received at the post office.

Regular Purchase Scheme

21. If you already hold a Bond you may, subject to the maximum holding limit (see paragraph 26), buy further Bonds under these terms and conditions through the Premium Bonds Regular Purchase Scheme. Under the Scheme you can buy Bonds on a monthly basis but the minimum for each purchase will be £50 instead of the normal minimum of £100. Sums above £50 must be a multiple of £10. Payment for the Bonds must be by standing order from a bank or building society account in your name. We will send you a standing order mandate for you to send directly to your bank or building society authorising them to make the payments. Assuming a payment is for at least £50 and is a multiple of £10, we will automatically send the new Bonds purchased with that payment to your last address recorded at NS&I. The date of purchase will be the date the payment is received in the Director’s account at the Bank of England. If any payment is less than £50 or is not a multiple of £10 it will be returned to your bank in full. You may cancel your standing order at any time without notifying NS&I. We will send you new terms and conditions if any changes are made in the future. The Regular Purchase Scheme is not available for purchases on behalf of children under 16 years. 

Reinvestment of prizes

22. NS&I may offer a scheme allowing the purchase of Bonds by the automatic reinvestment of prizes. Under such a scheme, you will need to give us a mandate (an “automatic prize reinvestment mandate”) to use any prizes you win to buy new Bonds in your name (for details of any current scheme contact NS&I).

23. For all purchases, we will send you a certificate of investment showing the value and date of your purchase.

Purchase and holding limits

24. You may only buy Bonds in multiples of £10 (ten £1 units). The minimum purchase at any time is £100 (one hundred £1 units) or, where the purchase is made under the Regular Purchase Scheme or under an automatic prize reinvestment mandate, £50 (fifty £1 units).

25. The purchase limits in paragraph 24 do not apply where the purchase is made under an automatic prize reinvestment mandate and the purchase will take the holding up to the maximum limit (see paragraph 26). Any balance of a prize will be paid by warrant.

26. You may not hold more than £30,000 (thirty thousand £1 units). This limit is set by the Regulations and may be changed from time to time.

Cashing in

27.  Bonds bought by cheque or debit card can only be cashed in after your payment has cleared. The time taken for payments to clear is detailed in the Premium Bonds brochure. Bonds can be cashed in by completing a form (available at post offices and from NS&I) and sending it to NS&I with your Bond(s). Payment will normally be made by direct credit to a bank (including the National Savings Bank) or building society account in your name. You will need to give details of such an account in your application to cash in. Where the Bonds to be cashed in are held by a child under 16, payment will normally be made to the parent or guardian. The Director intends to use the Bankers’ Automated Clearing Service (BACS) for this purpose, but reserves the right to use a different means of electronic transfer.

28. The date a Bond is repaid will be taken to be the date on which, in the normal course, the payment would be credited to the nominated account following initiation of the electronic transfer by the Director. In the case of BACS, this is normally two banking days after the Director initiates the transfer.

29. Where the Director initiates an electronic transfer properly, neither he nor the Treasury will be liable for:
(a) any failure or delay of the receiving bank or building society in crediting the nominated account;
(b) any failure or delay in any part of the electronic transfer process which is beyond the Director’s direct control;
including any failure which occurs because the specified account is incapable of receiving an electronic transfer.

30. Payment can be requested by crossed warrant (like a cheque). In such cases the date a Bond is repaid will be taken to be the date on the warrant.

Payment of prizes

31. Prizes will normally be paid by crossed warrant or, where an automatic prize reinvestment mandate has been completed, by the purchase of new Bonds. Prizes won by a child under 16 will normally be made payable to the parent or guardian.

Changes in these terms and conditions

32. The Treasury reserve the right by giving not less than three months' notice in the gazettes:
(a) to change the individual prize values described in paragraph 6;
(b) to change the provisions of paragraph 12 that relate to the eligibility of a Bond for inclusion in a draw after the death of the registered holder; and
(c) to declare any Bonds purchased on or before a date specified in the notice to be ineligible for further draws.

Regulations

33. As at 1 September 2008, The Premium Savings Bonds Regulations 1972 (Statutory Instrument Number 1972/765) have been amended by the following Statutory Instruments:

Law and jurisdiction

34. These terms and conditions and any agreement made on the basis of them will be governed by and interpreted in accordance with English law.

35. In the event of the death of the holder of a Bond, the Director reserves the right to make any payment in respect of the Bond in accordance with the law of the place in which the Bond holder resided or, if different, was domiciled at the date of their death.

36. Subject to paragraphs 37 and 38, the courts of England are to have exclusive jurisdiction to settle any dispute (including claims for set off and counterclaims) which may arise in connection with these terms and conditions or any agreement made on the basis of them and which, subject to the Regulations, falls to be determined by a court of law.

37. Where section 16 of the Civil Jurisdiction and Judgments Act 1982 applies the relevant court of law of the relevant part of the United Kingdom shall have jurisdiction to settle any such dispute.

38. Paragraphs 36 and 37 are included for the benefit of NS&I. Accordingly NS&I retains the right to bring proceedings in any other court which has jurisdiction to whose jurisdiction the holder irrevocably submits.

Premium Bonds
National Savings and Investments
Blackpool
FY3 9YP

22 September 2008

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