NS&I Savings Rate Increase 2026: British Savings Bonds, Premium Bonds, and Current Rates Explained

National Savings and Investments (NS&I) is the UK government’s savings bank, backed by HM Treasury. Unlike high-street banks, money held with NS&I is guaranteed by the government — not just protected up to £85,000 by the Financial Services Compensation Scheme (FSCS), but entirely secure regardless of the amount. In April 2026, NS&I increased the interest rates on its British Savings Bonds to up to 4.50% AER on the one-year term, responding to a higher net financing target set by HM Treasury for 2026/27. This guide explains the current NS&I rates, how British Savings Bonds work, what has changed with Premium Bonds, and the key considerations for UK savers deciding whether NS&I is the right home for their money.

NS&I British Savings Bonds: Current Rates (April 2026)

NS&I’s British Savings Bonds are fixed-term savings products available in one, two, three, and five-year terms. They come in two versions — Guaranteed Growth Bonds (interest paid at maturity) and Guaranteed Income Bonds (interest paid monthly). As of April 2026 (Issue 89 for the one-year bond), the rates are as follows.

Term	Guaranteed Growth Bond (AER)	Guaranteed Income Bond (Monthly Gross / AER)	Issue Number
1 Year	4.50% AER	4.41% gross / 4.50% AER	Issue 89
2 Year	4.48% AER	4.40% gross / 4.48% AER	Issue 77
3 Year	4.45% AER	4.37% gross / 4.45% AER	Issue 79
5 Year	4.40% AER	4.32% gross / 4.40% AER	Issue 71

Minimum investment: £500. Maximum: £1 million per person per Issue. These rates were updated on 28 April 2026. Always verify current rates at nsandi.com before investing, as NS&I rates can change when new Issues are released.

What Are NS&I British Savings Bonds?

British Savings Bonds is the umbrella name for NS&I’s fixed-term savings products — previously known as Guaranteed Growth Bonds and Guaranteed Income Bonds. They are fixed-term investments, meaning once you commit your money, you cannot access it until the term ends. Unlike Premium Bonds, which give a chance to win tax-free prizes but no guaranteed return, British Savings Bonds provide a fixed, guaranteed rate of return for the full term.

Guaranteed Growth Bonds

Guaranteed Growth Bonds pay interest at the end of the term. The interest compounds annually — meaning interest earned in earlier years is added to the principal and earns interest itself over subsequent years on longer-term bonds. The entire sum (principal plus accumulated interest) is paid out at maturity. This structure maximises the total return but means no income is received during the term.

For tax purposes, the interest on a Guaranteed Growth Bond is taxable in the year it is paid — which is the year of maturity. This means the full amount of interest accrued over a two, three, or five-year term is assessed for tax in a single tax year. For longer-term bonds, this can create a significant tax liability in the maturity year, potentially pushing a saver over their Personal Savings Allowance (PSA) if the accumulated interest is large.

Guaranteed Income Bonds

Guaranteed Income Bonds pay interest monthly into a nominated UK bank account. The AER is the same as the equivalent Growth Bond (reflecting the annual equivalent), but because interest is paid out monthly rather than compounded, the monthly gross rate is slightly lower than the AER. For example, the one-year Income Bond pays 4.41% gross monthly, equivalent to 4.50% AER.

The monthly payment structure is useful for savers who want regular income — retirees supplementing a pension, for example — and also spreads the tax liability across each tax year in which interest is received rather than concentrating it all in the maturity year.

How NS&I Security Compares to Bank Savings

The key distinction between NS&I and high-street bank savings is the nature of the security.

	NS&I	UK Bank / Building Society
Security backing	100% HM Treasury guarantee — unlimited	FSCS protection up to £85,000 per person per institution
For amounts over £85,000	Fully protected regardless of amount	Amount above £85,000 is at risk if bank fails
Rate competitiveness	Usually slightly below market-leading rates	Challenger banks often offer slightly higher rates
Fixed-term access	No early access for British Savings Bonds	Early access penalties vary by provider
Tax on interest	British Savings Bonds — taxable; Premium Bonds — tax-free prizes	Taxable (subject to PSA)
FSCS protection	Not needed — government guarantee is stronger	Yes — up to £85,000

The NS&I government guarantee is genuinely different from and stronger than FSCS protection for amounts over £85,000. Savers with very large sums — inheritance proceeds, property sale proceeds, business reserves — who need the security of knowing every pound is protected regardless of amount will find NS&I uniquely positioned in the UK market.

Premium Bonds in 2026: What Has Changed?

Premium Bonds remain NS&I’s most popular product, with approximately 22 million holders. Rather than paying interest, Premium Bonds enter all eligible £1 bonds into a monthly prize draw. The prize fund rate — the equivalent annual return if the prize fund were divided equally across all bonds — determines the overall generosity of the draw.

In April 2026, NS&I reduced the Premium Bonds prize fund rate from 3.60% to 3.30%. This reduction means approximately £25 million less is paid out in prizes each month. Alongside this, the odds of any individual £1 bond winning a prize in a given month have lengthened to 23,000 to 1.

Premium Bonds vs British Savings Bonds

The prize fund rate of 3.30% is the statistical average return if winnings were distributed evenly — but Premium Bonds do not work that way. A small number of bonds win large prizes (including the £1 million jackpot), while the vast majority of bonds win nothing each month. The median return for a holder with average luck is lower than the headline prize fund rate.

The key advantages of Premium Bonds are: prize winnings are tax-free (they are not interest and do not count toward your PSA); you can withdraw your money at any time without penalty; and there is no minimum term. The key disadvantages are: no guaranteed return; the actual return depends on luck; and the effective rate is now 1.2 percentage points below the one-year British Savings Bond rate.

Who Benefits Most from Premium Bonds?

Premium Bonds are particularly tax-efficient for higher-rate and additional-rate taxpayers whose Personal Savings Allowance is reduced (£500 for higher-rate; nil for additional-rate taxpayers). For these savers, the tax-free nature of Premium Bond prizes — even at a lower expected return — can make them more attractive on an after-tax basis than taxable savings paying a higher gross rate.

For basic-rate taxpayers with significant savings interest from other sources who have already used their £1,000 PSA, Premium Bonds also offer a tax-efficient route to some return without adding to their taxable interest income.

NS&I Junior ISA and Direct ISA

NS&I also offers ISA products — the Junior ISA and the Direct ISA. ISA interest is tax-free and does not count toward the Personal Savings Allowance, making NS&I ISAs useful for savers who want the additional security of the government guarantee alongside the tax efficiency of an ISA wrapper.

NS&I’s Direct ISA is a variable rate cash ISA. The rate is typically below the best easy-access ISA rates available from high-street challenger banks. For savers who prioritise the NS&I government guarantee above the last decimal point of return, the Direct ISA is a sound choice. For savers chasing the highest available ISA rate, comparing against the full market is advisable.

The NS&I Junior ISA allows parents or guardians to open a tax-efficient savings account for children under 18. The annual ISA subscription limit applies (£9,000 for Junior ISAs in 2026/27). The child can access the funds when they turn 18.

Tax on NS&I Interest: What You Need to Know

Interest earned on NS&I British Savings Bonds is taxable income in the year it is received. It is paid gross (without tax deducted at source), and you are responsible for reporting it to HMRC and paying any tax owed.

Personal Savings Allowance

The Personal Savings Allowance (PSA) allows most UK savers to earn a certain amount of savings interest each tax year without paying tax on it: £1,000 for basic-rate taxpayers; £500 for higher-rate taxpayers; nil for additional-rate (45%) taxpayers. NS&I interest counts toward this allowance alongside interest from banks and building societies.

For a basic-rate taxpayer investing £20,000 in the one-year 4.50% Growth Bond, the interest of approximately £900 would fall within the £1,000 PSA and be received free of income tax. For a higher-rate taxpayer with the same investment, the £900 interest exceeds the £500 PSA by £400, on which 40% income tax would be payable — approximately £160.

The Maturity Lump Sum Tax Issue (Growth Bonds)

For multi-year Guaranteed Growth Bonds, the entire accumulated interest is taxable in the year the bond matures — not spread across the years it accrues. This can create an unexpectedly large tax bill in the maturity year. For example, a £50,000 five-year Growth Bond at 4.40% AER would accumulate approximately £12,100 in interest over the term. This full £12,100 would count as savings income in the maturity year and could easily exceed both the PSA and push the saver into a higher tax band.

Savers who are concerned about lump sum tax liability from multi-year Growth Bonds have two main options: choose Guaranteed Income Bonds instead (spreading interest across tax years as it is paid monthly); or consider investing in a series of shorter-term bonds (annual renewals) rather than one long-term bond, so the taxable interest is spread across multiple tax years.

How HMRC Collects Tax on NS&I Interest

For PAYE employees and pensioners, HMRC typically adjusts the tax code to collect savings interest tax rather than requiring a self-assessment tax return for small amounts. For larger amounts of savings interest, or if you are already self-employed or complete a self-assessment return, you declare the interest on your annual return. NS&I does not deduct tax at source — the full interest amount is paid to you, and any tax owed is collected by HMRC separately.

How to Invest in NS&I British Savings Bonds

1. Check eligibility: You must be aged 16 or over and a UK resident to invest in British Savings Bonds. There is no upper age limit.
2. Visit nsandi.com: All NS&I products are managed online. If you do not have an existing NS&I account, you will need to register.
3. Choose your term and type: Decide whether you want a one, two, three, or five-year bond, and whether you want interest at maturity (Growth) or monthly (Income).
4. Fund the account: Minimum £500, maximum £1 million per Issue. Payment is by UK debit card or bank transfer.
5. Set maturity instructions: Decide in advance what you want to happen at maturity — re-invest in a new Issue, transfer to another NS&I account, or withdraw to your bank. Failure to provide instructions typically results in automatic reinvestment into the then-current Issue, which may be at a different rate.
6. Important: There is no early access facility once the 30-day cancellation period expires. Do not invest money you may need before the term ends.

Is the NS&I 6.2% Rate Still Available?

No. The 6.2% rate on NS&I’s one-year Guaranteed Growth Bond was available in 2023 as a limited-time Issue (Issue 62), introduced to meet a specific HM Treasury financing requirement. It is no longer available to new investors. The current maximum rate is 4.50% AER on the one-year British Savings Bond (Issue 89) as of April 2026.

Holders of maturing 6.2% bonds will be offered the option to reinvest at the current rate. If you hold a maturing NS&I bond, you will receive notification from NS&I ahead of the maturity date with your options. Ensuring NS&I has your current contact details is important to avoid unintentional automatic reinvestment at the prevailing rate without your active decision.

Frequently Asked Questions

What is the NS&I savings rate increase for 2026?

NS&I increased the rates on its British Savings Bonds from April 2026 to up to 4.50% AER on the one-year Guaranteed Growth Bond (Issue 89). The two-year bond is 4.48% AER, the three-year 4.45% AER, and the five-year 4.40% AER. Equivalent Guaranteed Income Bonds pay the same AER but distribute interest monthly. Always verify current rates at nsandi.com as rates are subject to change when new Issues are released.

Is NS&I better than a bank savings account?

It depends on your priority. NS&I offers 100% government-backed security with no limit — unlike the £85,000 FSCS protection cap at banks. For amounts above £85,000, or for savers who want absolute certainty of capital security, NS&I has a unique advantage. For pure rate comparison, some high-street and challenger bank fixed-rate bonds offer slightly higher rates than NS&I. The trade-off is between maximum security (NS&I) and maximum rate (market comparison).

Can I access NS&I British Savings Bonds early?

No. British Savings Bonds (both Growth and Income) are strictly fixed-term with no early access facility once the 30-day cancellation period has passed. You must be certain you can commit your money for the full one, two, three, or five-year term before investing. This is different from Premium Bonds, which can be withdrawn at any time without penalty.

Do I pay tax on NS&I interest?

Yes — interest on British Savings Bonds is taxable. It is paid gross (without tax deducted) and counts toward your annual Personal Savings Allowance (£1,000 for basic-rate taxpayers; £500 for higher-rate; nil for additional-rate). If your savings interest exceeds your PSA, you will owe income tax on the excess, collected by HMRC via your tax code or self-assessment. Premium Bond prizes are tax-free and do not count toward the PSA.

What is the maximum I can invest in NS&I Bonds?

The maximum investment is £1 million per person, per Issue. This high ceiling makes NS&I bonds suitable for larger sums that would exceed the £85,000 FSCS protection limit at a conventional bank. The minimum investment is £500.

Which is better — Guaranteed Growth or Guaranteed Income bonds?

Both provide the same AER, so the total return over the term is equivalent. The choice depends on your circumstances. Guaranteed Growth Bonds reinvest interest to maturity and suit savers who do not need regular income and want maximum capital accumulation — but note that all interest is taxable in the maturity year. Guaranteed Income Bonds pay interest monthly, making them suitable for savers who want regular income (retirees supplementing a pension, for example) and also spread the tax liability across each year of the term rather than concentrating it in the final year.

Final Thoughts

The NS&I savings rate increase to 4.50% AER in April 2026 makes British Savings Bonds a competitive fixed-rate option for UK savers — not necessarily the market-leading rate available from challenger banks, but offering the unique advantage of 100% government-backed security regardless of the amount invested. For savers with more than £85,000 to deposit, or those for whom absolute capital security is the overriding priority, NS&I occupies a position in the market that no bank can replicate.

The simultaneous reduction in Premium Bonds’ prize fund rate to 3.30% shifts the calculus for many savers — the fixed guaranteed return from British Savings Bonds now clearly outperforms the expected Premium Bond return for most holders, unless tax-free prizes provide a specific advantage for your tax position.

Always check current rates at nsandi.com before committing, consider the tax implications of Growth vs Income bonds for your individual circumstances, and ensure you set clear maturity instructions to avoid automatic reinvestment at rates you have not actively chosen.

This article is for general informational purposes only and does not constitute financial advice. Consult a qualified independent financial adviser for guidance specific to your situation.

DISCLAIMER: This article is for general informational purposes only and does not constitute financial advice. Savings rates change frequently — always check nsandi.com for current rates before investing. Consider seeking independent financial advice for significant investment decisions.