Skip to main content
WUHLD
← Back to articles

Premium Bonds: Can They Be Inherited When You Die?

· 20 min

Note: The following scenario is fictional and used for illustration.

Margaret, 68, had been buying Premium Bonds for 40 years and had built up the maximum £50,000 holding. When she died unexpectedly from a stroke, her daughter Sarah discovered the bonds while sorting through paperwork. Sarah had no idea whether her mother's bonds could be inherited, if they were still winning prizes, or how long she had to claim them.

After weeks of confusion, Sarah learned three surprising facts: Premium Bonds can't be transferred to beneficiaries like other assets, they continue winning prizes for 12 months after death, and she needed probate because her mother's NS&I holdings exceeded £5,000.

Sarah's story isn't unique. Over 24 million people hold Premium Bonds in the UK, with a total of £127.7 billion invested. Yet many families only discover these bonds during estate administration—then face confusion about the claims process.

This article explains exactly what happens to Premium Bonds when you die, how executors claim them, the probate requirements, and whether keeping bonds in the draw for 12 months is the right choice for your estate.

Table of Contents

Can Premium Bonds Be Inherited in the UK?

No, Premium Bonds cannot be inherited or transferred directly to beneficiaries. Unlike savings accounts or shares that can pass to named individuals, Premium Bonds must be cashed in by your executor or administrator when you die.

Premium Bonds have three key restrictions. They cannot be transferred to another person, they cannot be nominated to pass to a beneficiary when you die, and they cannot be held jointly with another person. This means there's no automatic survivorship like you'd find with a joint bank account.

When you die, your executor must redeem the bonds and then distribute the cash value according to your will. The bonds themselves don't pass to anyone—only their value does.

James left £30,000 in Premium Bonds to his nephew in his will. His executor first had to cash in all the bonds with NS&I, then transfer the £30,000 (plus any prizes won after death) to the nephew. The nephew couldn't simply take over James's bond numbers.

The maximum individual holding is £50,000 per person, making Premium Bonds a significant asset in many estates. Understanding that the proceeds—not the bonds themselves—form part of your estate is crucial for proper will planning.

What Happens to Premium Bonds When the Holder Dies?

Premium Bonds remain eligible for monthly prize draws for up to 12 months after the holder's death. During this period, any prizes won are added to the estate and eventually distributed to beneficiaries.

Executors have two options. They can cash in the bonds immediately and receive the face value, or they can keep the bonds in monthly prize draws for up to 12 months before cashing in. Both choices have implications for estate distribution timing.

Any prizes won before death that weren't claimed are automatically added to the estate. Any prizes won after death within the 12-month window also become part of the estate. All prize money remains tax-free, even after death.

After 12 months, NS&I automatically stops entering the bonds in draws. The bonds don't earn any interest—they only have prize potential. Once removed from draws, they simply hold their face value until the executor claims them.

Emma's executor kept her £25,000 in bonds in the draw for eight months and won £175 in prizes before cashing in. This added value went to Emma's beneficiaries alongside the £25,000 face value.

In 2024, close to 71 million Premium Bonds prizes were won, totaling more than £5.5 billion. The current prize fund rate is 4.00%, with odds of any £1 bond winning at 22,000 to 1.

Here's how the two options compare:

Scenario Cash in immediately Keep in draw for 12 months
Guaranteed value Face value of bonds Face value + potential prizes
Risk None Could win nothing extra
Speed Faster estate distribution Delays final distribution
Best for Small estates, urgent debts Larger estates, no liquidity pressure

Do You Need Probate to Claim Premium Bonds?

NS&I may require a Grant of Probate if the deceased's total NS&I holdings exceed £5,000. This threshold includes all NS&I products combined—not just Premium Bonds alone.

The £5,000 limit applies to the total value across Premium Bonds, Income Bonds, Direct Saver accounts, Guaranteed Bonds, and any other NS&I products. Many executors mistakenly think the threshold applies only to Premium Bonds, leading to surprise probate requirements.

For estates under £5,000 in total NS&I holdings, you can claim the bonds with just a death certificate and NS&I's bereavement claim form. For estates over £5,000, you must also provide a Grant of Probate (in England and Wales) or Letters of Administration (in Scotland).

Robert had £4,000 in Premium Bonds and £2,000 in an NS&I Direct Saver account. Although neither product individually exceeded £5,000, the combined £6,000 meant his executor needed probate to claim both.

NS&I aims to respond within 11 working days after receiving complete documentation. The actual time to receive funds depends on whether probate is required.

Executors need to provide:

  • Completed NS&I bereavement claim form (available online)
  • Certified death certificate (original or certified copy)
  • Grant of Probate or Letters of Administration (if over £5,000)
  • Bond holder's full name, date of birth, date and place of death
  • Previous addresses (NS&I may need these to locate old accounts)

If you're not sure whether the deceased held Premium Bonds, the same bereavement form can be used to search NS&I records. You'll need basic information like date of birth and previous addresses.

How Executors Claim Premium Bonds After Death

Claiming Premium Bonds involves a straightforward process, though timing depends on whether probate is required and how long you keep bonds in the draw.

Start by locating evidence of the bonds. Look for holder numbers, statements, or prize notifications among the deceased's paperwork. If you find a holder number, you can check the current bond value using NS&I's online tools or by calling their customer service line.

Complete NS&I's bereavement claim form, available online at nsandi.com. You can submit this form online without creating an account, which speeds up the process significantly.

Gather the required documents based on the estate value. You'll always need a certified death certificate. If total NS&I holdings exceed £5,000, you'll also need to wait for and provide the Grant of Probate.

Submit your completed form and documents to NS&I. They'll acknowledge receipt and confirm whether they need any additional information. NS&I typically responds within 11 working days to tell you what happens next.

Decide whether to cash in immediately or keep the bonds in draws. This is a crucial decision point that affects estate distribution timing and potential value.

If you choose to cash in, NS&I transfers the funds to the executor's account or the estate account. If you keep bonds in draws, you can cash them in at any point up to 12 months after death.

Timeline expectations vary by estate complexity. For estates under £5,000, the full process typically takes two to four weeks. For estates requiring probate, expect two to four months from death to receiving the funds.

Common executor mistakes include forgetting to check for unclaimed prizes won before death, not realizing all NS&I products count toward the £5,000 threshold, assuming bonds can stay in draws indefinitely beyond the 12-month limit, and cashing in immediately without considering prize potential for larger holdings.

If you don't know whether the deceased had Premium Bonds, use the bereavement form to trace unknown bonds. NS&I will search their records using basic details you provide.

Premium Bonds and Inheritance Tax: What You Need to Know

Premium Bonds are included in your estate valuation for inheritance tax purposes. The value counted is the face value of the bonds plus any unclaimed or uncashed prizes at the date of death.

Prize winnings themselves are always tax-free—there's no income tax or capital gains tax on Premium Bond prizes. However, the total value of your Premium Bonds contributes to your estate for inheritance tax calculations.

According to HMRC guidance, prizes are counted from the day after the prize notification was dispatched. This means if a prize was allocated before death but not yet claimed, it forms part of the estate.

If your estate exceeds the £325,000 nil-rate band, any amount over this threshold is taxed at 40%. Premium Bonds contribute to pushing estates over this limit.

Married couples and civil partners can combine their nil-rate bands, creating a total threshold of £650,000 before inheritance tax applies. The residence nil-rate band may also apply if you're leaving your home to direct descendants, adding up to £175,000 to your allowance.

David's estate was worth £350,000, including £30,000 in Premium Bonds. The bonds pushed his estate £25,000 over the nil-rate band, resulting in £10,000 inheritance tax on that portion (40% of £25,000). His executor had to account for this tax liability when distributing the estate.

When reporting Premium Bonds for inheritance tax, executors must complete form IHT406. The total face value plus unclaimed prizes should be declared in box 54 (Premium Bonds) and included in box 3 (total value).

The inheritance tax nil-rate band remains at £325,000 through the 2025-2026 tax year. The residence nil-rate band is £175,000 for qualifying estates.

Should Executors Keep Bonds in the Prize Draw or Cash In Immediately?

Deciding whether to keep Premium Bonds in the monthly draws or cash them in immediately requires weighing several factors against your estate's specific circumstances.

Consider the size of the holding first. Larger holdings have better statistical odds of winning something. With 22,000 to 1 odds per £1 bond, a £50,000 holding has far better chances than a £5,000 holding, though nothing is guaranteed.

Estate liquidity needs matter significantly. If the estate has debts to pay, inheritance tax bills to settle, or beneficiaries who need funds urgently, cashing in immediately makes sense. Waiting 12 months for potential prizes delays everything.

Beneficiary expectations play a role. Some beneficiaries prefer the certainty of receiving the face value quickly. Others are happy to wait if there's potential for extra value from prizes.

Compare the current prize fund rate to other options. The 4.00% prize fund rate sounds attractive, but remember this is distributed unevenly across all bondholders. Most people win small amounts or nothing, while a few win large prizes.

Cash in immediately when the estate has debts or urgent financial obligations, when beneficiaries need funds quickly for their own circumstances, when the holding is small (under £10,000) making prize likelihood low, or when beneficiaries explicitly prefer certainty over speculation.

Keep bonds in draws when the holding is large (£30,000-£50,000) with better statistical odds, when the estate has sufficient liquidity from other assets to cover immediate needs, when there's no urgent distribution deadline pressuring the executor, or when beneficiaries are willing to wait for the potential upside.

The mathematical reality is sobering. With 22,000 to 1 odds per bond, prizes aren't guaranteed regardless of holding size. You're essentially choosing between certainty (face value now) and hope (face value plus possible prizes later).

Claire's executor managed a £45,000 Premium Bonds holding. She kept them in draws for nine months and won £500 in prizes (averaging about £55 per month). This provided an extra £500 to the estate that beneficiaries wouldn't have received with immediate cashing.

Use this decision framework:

Does the estate have urgent debts or liquidity needs? If yes, cash in immediately. If no, continue.

Is the holding under £10,000? If yes, cash in immediately (low prize likelihood). If no, continue.

Do beneficiaries prefer certainty over waiting? If yes, cash in immediately. If no, keep in draws for up to 12 months and monitor prizes monthly.

Premium Bonds in Your Will: What to Specify

You cannot leave specific Premium Bond numbers to beneficiaries because the bonds themselves can't be transferred. However, you can direct where the cash proceeds from your bonds should go.

The correct approach is to leave "the cash value of my Premium Bonds" or "the proceeds from the redemption of my NS&I Premium Bonds" to named beneficiaries. This ensures your wishes are clear while respecting NS&I's non-transferability rules.

Give your executor discretion to decide whether to keep bonds in draws or cash in immediately. This flexibility allows them to make the best decision based on circumstances at the time of your death.

Recommended wording for your will might be: "I direct my executor to redeem my NS&I Premium Bonds (holder number XXXXX) and distribute the proceeds equally between my two children, [Name 1] and [Name 2]. My executor may, at their discretion, retain the bonds in monthly prize draws for up to 12 months after my death before redemption."

Include your NS&I holder number in your will or in accompanying documents stored with your will. This makes it easy for your executor to trace and claim your bonds without lengthy searches.

Store all Premium Bond documentation with your will, or note where this information can be found. Consider that certificates issued decades ago may be the only record of older bonds.

Think about how your total NS&I holdings affect probate planning. If you're close to the £5,000 threshold, your executor may need to apply for probate when they otherwise wouldn't.

Don't say "I leave my Premium Bond number X12345678 to my daughter" because bonds can't be transferred by number. Don't say "I leave my Premium Bonds to my partner" without specifying "the proceeds from redemption."

Do say "I leave the cash proceeds from all my NS&I Premium Bonds to my partner" or "I leave one-third of the value realized from my Premium Bonds to [charity name]."

Thomas specified in his will: "The proceeds from my Premium Bonds (holder number XXXXX, approximately £28,000) shall be divided equally between my three grandchildren." This gave his executor clear instructions while acknowledging the bonds must be redeemed first.

Tracing Unknown Premium Bonds After Death

Many people buy Premium Bonds decades ago and then forget about them. Paperwork gets lost, families move house, and bond certificates disappear. Executors often discover these bonds only through systematic searches.

NS&I reunited more than £166 million across 52,000+ accounts in the past year, including significant amounts in forgotten Premium Bonds. This shows how common unknown bonds are.

You can use NS&I's bereavement claim form to search for unknown bonds even if you have no evidence they exist. The search service is free and often reveals bonds purchased decades earlier.

To trace unknown bonds, you need the deceased's full name as it appeared on official documents, their date of birth, their date of death, and as many previous addresses as you can gather—going back decades if possible. If someone else may have bought bonds on behalf of the deceased (like a parent or grandparent), include that person's name too.

Submit this information using the same bereavement claim form. Tick the box indicating you're checking whether the deceased held bonds at all. NS&I searches their records and informs you if they find any accounts.

Linda's executor had no record of Premium Bonds in her paperwork. She submitted a trace request anyway. NS&I found £8,000 in bonds purchased by Linda's grandmother in 1975—still held in Linda's name. The bonds were worth their £8,000 face value, plus NS&I found £340 in unclaimed prizes accumulated over 49 years.

Over 84,000 Premium Bonds accounts were opened for under-16s in 2024. Many of these will be forgotten by the time those children reach adulthood and eventually die, making tracing services essential for future executors.

You can search online by completing the bereavement claim form at nsandi.com and ticking the "check if deceased held bonds" option. Alternatively, send the completed form by post to NS&I with the same information. You can also contact NS&I's bereavement team by phone and provide the same details.

The more previous addresses you can provide, the better. NS&I's records are linked to addresses, so including every place the deceased lived increases your chances of finding old accounts.

Common Premium Bond Inheritance Questions Answered

Can you add yourself to someone else's Premium Bonds before they die? No—Premium Bonds cannot be held jointly, and you can't be added as a co-holder to someone else's account.

Can Premium Bonds be gifted while the holder is alive? No—Premium Bonds are non-transferable. The holder must cash them in and gift the cash instead if they want to give the value to someone else.

What if the deceased won a big prize just before death? All prizes won before death are part of the estate, even if they weren't yet claimed when death occurred. Use NS&I's prize checker with the holder number to check for recent wins.

Do Premium Bonds automatically get cashed when someone dies? No—the bonds remain in draws until the executor actively decides to cash them in. They can stay in draws for up to 12 months, but nothing happens automatically.

What happens after 12 months if the executor doesn't claim the bonds? NS&I stops entering the bonds in prize draws, but they don't automatically cash them. The money remains held by NS&I until the executor submits a proper claim. There's no deadline for claiming, though obviously the sooner the better for estate distribution.

Can the executor reinvest prizes won during the 12-month period? No—automatic reinvestment of prizes stops upon death. All prizes won after death are added to the estate and can't be used to purchase more bonds in the deceased's name.

Are Premium Bonds protected under FSCS? NS&I is backed directly by HM Treasury, which means 100% of funds are guaranteed by the UK government. The Financial Services Compensation Scheme limit doesn't apply because NS&I has government backing rather than FSCS protection.

Ensure Your Premium Bonds Are Dealt With Correctly

Understanding how Premium Bonds work after death helps you plan your estate properly and makes your executor's job far easier.

Key points to remember:

  • Premium Bonds can't be inherited directly, but their value becomes part of your estate
  • Executors can keep bonds in prize draws for up to 12 months after death
  • Probate is required if total NS&I holdings exceed £5,000
  • Bonds must be explicitly mentioned in your will to direct where proceeds should go
  • Executors should check for unclaimed prizes and consider tracing unknown bonds

Like Margaret's daughter Sarah at the start of this article, many families discover Premium Bonds only after a loved one dies—then face confusion about claims, probate requirements, and whether they've missed out on prizes. Making your bonds easy for your executor to find and claim is a crucial part of responsible estate planning.

Create a will that clearly directs your Premium Bonds proceeds to the people you choose. With WUHLD, you can specify exactly how all your assets—including NS&I investments—should be distributed. It takes just 15 minutes online.

For £99.99 (vs £650+ for a solicitor), you'll get:

  • Your complete, legally binding will
  • A 12-page Testator Guide
  • A Witness Guide
  • A Complete Asset Inventory document (perfect for listing Premium Bond holder numbers)

You can preview your entire will free before paying anything.

Preview Your Will Free – No Payment Required

Frequently Asked Questions

Q: Can Premium Bonds be inherited in the UK?

A: Premium Bonds cannot be transferred to beneficiaries like other assets. When someone dies, their bonds must be cashed in by the executor or administrator. However, the bonds can remain in monthly prize draws for up to 12 months after death, with any winnings added to the estate and distributed according to the will or intestacy rules.

Q: Do Premium Bonds need probate when someone dies?

A: NS&I requires a Grant of Probate (or Letters of Administration) if the deceased's total NS&I holdings exceed £5,000. This threshold includes all NS&I products combined, not just Premium Bonds. For estates under £5,000, executors can claim the bonds with a death certificate and completed bereavement claim form.

Q: How long do Premium Bonds stay in the draw after death?

A: Premium Bonds remain eligible for monthly prize draws for up to 12 months after the holder's death. Executors can choose to cash them in immediately or keep them in the draw for the full 12-month period. Any prizes won during this time are added to the estate.

Q: Are Premium Bond winnings after death taxed?

A: Premium Bond prizes won after death are tax-free and don't count as income for the estate. However, the total value of Premium Bonds (including any unclaimed prizes) forms part of the deceased's estate and may be subject to inheritance tax if the estate exceeds the £325,000 nil-rate band.

Q: How do executors claim Premium Bonds after someone dies?

A: Executors must complete NS&I's bereavement claim form and provide a certified death certificate. For estates over £5,000, a Grant of Probate is also required. NS&I aims to respond within 11 working days. Executors can check if the deceased held bonds using the same form with basic details like date of birth and previous addresses.

Q: Can you nominate someone to inherit your Premium Bonds?

A: No, Premium Bonds cannot be nominated to pass directly to a named beneficiary. They also cannot be held jointly with another person. When you die, your bonds automatically become part of your estate and must be claimed by your executor, then distributed according to your will or intestacy rules.

Q: What happens to unclaimed Premium Bond prizes when someone dies?

A: Any unclaimed or uncashed Premium Bond prizes are included in the deceased's estate valuation for inheritance tax purposes. Prizes won before death count from the day after the prize notification was dispatched. Executors should check for unclaimed prizes using NS&I's prize checker when administering the estate.

Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.

Sources: