A lucky individual has claimed a £1m prize in the Premium Bonds draw, with the victorious winner boasting a 28-year-old age. Are you among those who have snagged a massive win this month?
In an unexpected move, the National Savings and Investments (NS&I) has announced a reduction in the prize fund rate for Premium Bonds, effective from the August 2025 draw. This marks the first rate change since April 2025 and will see the annual return drop from 3.80% to 3.60%.
Despite the rate cut, the odds of winning remain unchanged at 22,000 to 1 for each £1 bond held. However, the total prize fund will shrink slightly, meaning fewer large prizes will be paid out. The number of prizes awarded is expected to increase to over 6 million, with the prize distribution skewing more towards smaller prizes.
With the rate cut to 3.6%, savers can expect slightly smaller returns overall from their Premium Bonds compared to prior months when the rate was 3.8%. Over 80% of prizes for amounts of £25, £50, or £100 are expected, indicating an effective return on Premium Bonds will decrease for most holders.
NS&I states this adjustment balances the interests of savers, taxpayers, and financial sector stability in a changing savings landscape. The shift towards smaller prizes aims to provide more winners with a chance to enjoy the tax-free benefits of Premium Bonds, albeit with smaller average winnings.
Notably, this is the first time in more than a decade that a winner has won a £1 million Premium Bonds prize with a bond this old. Two lucky savers, one from Nottingham and the other from Norwich, have recently won significant prizes. The Nottingham resident won £100,000 with a bond purchased in October 1997, while the Norwich winner, who held the maximum £50,000 holding, scooped the £1 million jackpot with a bond purchased in June 2014.
The changes in the prize fund rate will undoubtedly impact future winnings for Premium Bonds holders. While the chance of winning remains constant, the average prize size and overall expected returns will decrease slightly due to the prize fund rate cut. Savers should expect smaller average winnings going forward but retain the security and tax-free nature of Premium Bonds.
| Aspect | Before Aug 2025 | From Aug 2025 | |------------------------------|---------------------|---------------------| | Prize fund rate (annual return) | 3.80% tax-free | 3.60% tax-free | | Odds of winning | 22,000 to 1 | 22,000 to 1 | | Prize fund size | Higher | Slightly lower (~£396.7 million) | | Number of prizes | Lower (than August) | Over 6 million prizes | | Prize distribution | More large prizes | More smaller prizes (80% for £25-£100) |
[1] NS&I Press Release, [date] [2] Financial Times, [date] [3] BBC News, [date]
Due to the announced reduction in the prize fund rate for Premium Bonds, savers may expect slightly lower returns on their investments starting August 2025. In the new financial landscape, the emphasis will be on more people winning smaller prizes, with a decreased amount of large prizes awarded.
In the adjuster's words, this move balances the interests of savers, taxpayers, and financial sector stability, as it provides more individuals with an opportunity to enjoy tax-free benefits albeit with smaller average winnings. This results in a shift from personal-finance planning considering larger prizes to focusing on accumulating numerous smaller ones instead.
