Tax Makes Premium Bonds Comparable

The interest rate of 7% free of all tax makes premium bonds comparable to building society premium accounts for basic rate taxpayers and rather better for people paying tax at higher rates. But the main attraction of premium bonds is that they are fun. It is not very interesting to earn £7 a year on an investment of £100.

But it is very exciting to know that you have the chance of winning £89 0,000! Your £7 unpaid interest is your stake in Britain's national lottery.

There is a minimum investment of £10 and a new bond does not go into the draw for three clear calendar months after purchase. So, for example, a bond bought at any time in January is entered in the May draw. You can cash a bond in at any time.

The bonds are selected by a machine called ERNIE. The numbers drawn are thoroughly checked for randomness by an independent auditor and there are no 'lucky' or unlucky numbers.

You can arrange to go and see ERNIE at

If you like a gamble, then it is worth having some money in premium bonds, especially if you pay tax.

You can buy premium bonds at a post office and at banks. There is a special download about them entitled Your Questions on ERNIE.

Other webpages of interest - Interest Paid Gross

or Income Bonds

Interest Paid Gross

/retirement/pensions/income/advice/interest-paid-gross.php... see: Interest Paid Gross