NS&I gives aunts, uncles and family friends the chance to save for young children (2024)

FAQs

Can I buy Premium Bonds for my nephews? ›

Anyone aged 16 or over can buy Premium Bonds. Parents, legal guardians and (great) grandparents can invest on behalf of their child or grandchild aged under 16.

A tax free way to save for children up to the age of 18. Invest from £1 to £9,000 in the tax year 2023/24. We also have a postal-only account – the Investment Account – that currently pays our lowest rate of interest (0.60% gross/AER, variable).

please make sure the parent/guardian is happy to look after the investment for the child, and agrees to you giving us their details. we will check the identity and address of everyone named on your application, and we may need to ask for documents to prove this.

What happens if your child wins premium bonds? Once a child wins the jackpot, the money goes to the parent or guardian in charge of the child's account. The parent or 'responsible person' looking after the child's bond will determine what to do with the prize money.

Gifting paper I savings bonds

The only way to get a paper savings bond is to use your IRS tax refund. With your tax refund, you can buy savings bonds for anyone (yourself, your child, or as a gift to anyone). If you buy paper savings bonds, we mail the savings bonds to you.

Security bonds are ideal for children because they are the only type of security kids can actually own. Anyone can purchase a savings bond for another individual but important information will be needed from the bondholder.

Some NS&I products might charge penalties if you cash out early for some investment products, meaning you may get less back than your original investment. Unlike most UK banks, the NS&I is for savings only. This means it doesn't lend money. For example, you can't take out a mortgage or a credit card.

Purchasing savings bonds is not only a very generous thing to do for a child, it's also a smart financial move. Buying savings bonds for kids allows them to earn compound interest when they're young, which can help them create a financial foundation long before they turn 18.

You can gift a savings bond to adults or children. A child under 18 can have a TreasuryDirect account if the child's parent or other adult custodian has a TreasuryDirect account and sets up a linked account for the child. In TreasuryDirect, you can give anyone either EE or I savings bonds.

Premium Bonds are not an asset that can be passed on to a beneficiary in the same way that funds from bank accounts and savings accounts can; they cannot simply be inherited or transferred to someone else's name.

Is it worth putting 50000 into Premium Bonds? ›

On average, even with 50,000 bonds, you would wait 99,450 years before having an even chance of winning one. In the two hundred millennia since hom*o sapiens first appeared, you might have expected two.

What happens to someone's Premium Bonds when they die? Unlike most other assets, Premium Bonds cannot simply be passed on to beneficiaries of the estate, as they cannot be transferred into someone else's name.

Drawbacks of Premium Bonds

If you want a regular income, Premium Bonds may not be the best option for you - you may be better off looking at different types of investment or savings accounts, including isas. You'll also receive no interest, as the interest accrued on bonds goes towards the prize fund.

If the deceased's Premium Bonds stay in the draw, which they can for up to 12 months (instead of being repaid), who will receive any prizes won? Once we've been told of the customer's death, any prizes won will be paid by warrant (like a cheque) to the person entitled to the money after we've completed the claim.

$10,000 limit: Up to $10,000 of I bonds can be purchased, per person (or entity), per year. A married couple can each purchase $10,000 per year ($20,000 per year total). 7.12% interest: The yield on I bonds has two components—a fixed rate and an inflation rate.

Key Points. Pros: I bonds come with a high interest rate during inflationary periods, they're low-risk, and they help protect against inflation. Cons: Rates are variable, there's a lockup period and early withdrawal penalty, and there's a limit to how much you can invest.

Are EE and I Bonds transferable? Yes. The owner can transfer EE and I Bonds to another person with a TreasuryDirect account; however, you must wait five business days after the purchase date to transfer the bonds.

Give financial assets through a Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) custodial account. These accounts allow you to gift and transfer any amount of money, securities, and even property to a minor.

You can open a custodial brokerage account at a bank or brokerage firm. A custodial account can be a great way to save on a child's behalf, or to give a financial gift. Basically, these are easy-to-open accounts used to invest in stocks, bonds, mutual funds, and more, all to give your child a better future.

How much I bonds can I buy for my kids? ›

You can buy inflation-protected Series I bonds in a child's name. The amount you can purchase electronically for anyone, including a child, is capped at $10,000 per person per calendar year. The interest earned on I bonds is subject to federal taxes in most cases, but not state or local taxes.

With Premium Bonds you are not guaranteed any return on your investment, and returns are on average much lower than the interest you could earn on a normal savings account.

Some of the disadvantages of bonds include interest rate fluctuations, market volatility, lower returns, and change in the issuer's financial stability. The price of bonds is inversely proportional to the interest rate. If bond prices increase, interest rates decrease and vice-versa.

They also earn extra interest at rates which increase every year over set periods of time, called 'terms'. They are free of UK Income Tax and Capital Gains Tax - and you don't need to declare the interest on your tax return.

You'll need to ask the parent for the child's TreasuryDirect account number and Social Security Number. Then you follow the steps in Buy I Bonds as a Gift. The same process also works when you're buying for a niece or a nephew.

A $500 Series EE savings bond is worth $1,000, if you hold it for 20 years. A $10,000 bond is worth $20,000 after 20 years.

You may cash a savings bond for a child (a minor under the age of 18) if all of these statements are true: The child is too young to understand a request for payment. You are the child's parent. The child lives (resides) with you OR you have been granted legal custody of the child.

Log into your TreasuryDirect account (or open one in your name). Purchase the type of savings bond you wish (Series EE or Series I), in the desired denomination ($25 to $10,000). Deliver the savings bond gift to the recipient's TreasuryDirect account. Print out a gift certificate to give to the recipient.

If a surviving co-owner or beneficiary is named on the savings bond, the bond goes directly to that person. It does not become part of the estate of the person who died. If you are the named co-owner or beneficiary who inherits the bond, you have different options for paper EE or I bonds and paper HH bonds.

They are still taxable. The interest income of the savings bond will be taxed to the bond's owner—i.e., the recipient of the gift—when the bond matures and is redeemed for cash (or the owner will be taxed each year if they elect to report the interest income annually).

Is it taxable if you inherit bonds? ›

The short answer is yes, you generally will be responsible for taxes owed on savings bonds you inherit from someone else. The good news is that you may be able to defer taxes on inherited savings bonds or avoid it altogether in certain situations.

Dealing with Premium Bonds after someone's death

Assets are generally sold or encashed during the administration period, although some can be transferred to beneficiaries who wish to keep the holding. With Premium Bonds however, there is no option to transfer them.

Get a certified copy of the death certificate for everyone who has died who is named on any of the bonds. Have each person who is entitled to a distributed bond also fill out and sign the appropriate forms: If they want cash for their bond: FS Form 1522.

Premium Bonds are a government-backed savings account, in which those holding bonds earn no interest – with the money instead entered into a monthly prize draw. Every month, the Treasury-backed National Savings and Investments bank (NS&I) pays out millions of prizes, ranging in value from £25 to £1m.

Despite 21.4million savers collectively holding £107.4billion in Premium Bonds at the start of this month, £46.1billion of that is held by just 920,000 people who hold the maximum £50,000, according to figures from National Savings & Investments.

If you're happy to take more risk for the possibility of better returns, then a Stocks and Shares ISA might be better for you. If you might need emergency access to your money, bear in mind that Premium Bonds can take up to three banking days to process withdrawals.

You report the interest that accumulated on the bond during the bondholder's lifetime on their final tax return. The estate would be responsible for paying any tax due and going forward, you'd owe tax on any interest that continues to accrue on reissued bonds.

How to Avoid Paying Taxes on Savings Bonds. The IRS lets you avoid paying taxes on interest earned by Series EE and Series I savings bonds when you redeem them if you use the money toward qualified higher education costs for yourself, your spouse, or any of your dependents.

Premium Bonds can make a special gift for a child under 16. Until the child's 16th birthday, the parent or guardian named on the application looks after the Bonds, regardless of who bought them.

What is the average winnings on Premium Bonds? ›

In the past 12 months, the average holding of the 24 people to win the top prize has been £34,876. Nine of these winners — or just over a third — had the maximum £50,000 invested.

Premium Bonds

Parents, legal guardians and (great) grandparents can invest on behalf of their child or grandchild aged under 16.

You never need to worry about an unclaimed prize. We'll hold on to it until you get in touch with us. And there's no time limit to make your claim. Just log in to view your prize history, or use our prize checker to see if you have any prizes you don't know about yet.

For security, Premium Bonds prize cheques expire after 3 months.

Can you win more than one prize on premium bonds? Yes, however, each £1 bond can only have the chance to win one prize per month. They can win time and time again though.

What happens if your child wins premium bonds? Once a child wins the jackpot, the money goes to the parent or guardian in charge of the child's account. The parent or 'responsible person' looking after the child's bond will determine what to do with the prize money.

That means that a one million dollar bond, quoted at 1%, will cost $10,000. Million dollar commercial bonds are a rare requirement. If you are currently looking for a bond of this size you are more than likely looking for either a Contract Bond or a Court Bond.

Buying for someone else's child

You can apply online or by post. You can ask us to send you an electronic or paper gift card for you to pass on to the child. We'll also send you an acknowledgement of your investment. But only the nominated parent or guardian will be able to manage and cash in the Bonds.

On Form 8888, you also specify who will own the bonds. That means, you can give paper savings bonds to yourself or to anyone else (as a gift).

Can I buy a bond for my niece? ›

child's parent or legal guardian MUST set up a Minor Linked Account within the parent's or legal guardian's Treasury- Direct Account. ► Treasury bills, notes, bonds and inflation-protected securities (TIPS) are not available for purchase as gifts.

Dealing with Premium Bonds after someone's death

With Premium Bonds however, there is no option to transfer them. NS&I does allow them to be held by the estate for one year after death and during this time they will still be entered into the prize draw each month.

Applying for accounts

You can apply for one of our accounts on behalf of someone else. But you'll need to register for an authority first.

Only Series I savings bonds are available in paper. Paper Series I savings bonds come in 5 denominations: $50, $100, $200, $500, and $1,000. The only way to get a paper savings bond is to use your IRS tax refund. With your tax refund, you can buy savings bonds for anyone (yourself, your child, or as a gift to anyone).

Is there a maximum amount I can buy? In a calendar year, one Social Security Number or one Employer Identification Number may buy: up to $10,000 in electronic I bonds, and. up to $5,000 in paper I bonds (with your tax refund)

How much can I buy? Individual purchase limits for I bonds are $15,000 per calendar year — $10,000 worth of electronic I bonds and $5,000 worth of paper I bonds. Paper I bonds can only be purchased using your federal tax refund and are not bought electronically.

There are two types of Treasury Bonds you can give as gifts: EE and I savings bonds. EE bonds are better if the recipient will cash them after 20 years; savings are better for less than 20 years.

Purchasing Savings Bonds for Grandchildren

The easiest way to purchase savings bonds to your grandson or granddaughter is by buying a Series I Paper Bond during tax season. Use tax form 8888 to request that a portion of your return be paid in paper bonds. Enter the grandchild's full legal name as the owner of the bond.

Family Ties

The limit is per person — so if you're married, each spouse is allowed to purchase $10,000 in I bonds (plus the paper bonds if they have a tax return). You can also purchase up to $10,000 in I Bonds for your children, but they must be used for the child, to save for college, perhaps.

Do you pay taxes on I bonds? ›

Interest on I bonds is exempt from state and local income taxes and, if you qualify, from federal income tax when used to pay for higher education.