Premium Bonds £1bn Boost: How NS&I’s New Budget 2025 Target Could Change Interest Rates for Savers

London – 28 November 2025

Premium Bonds savers have been handed rare good news in the wake of Rachel Reeves’s Autumn Budget: the government has quietly ordered National Savings & Investments (NS&I) to raise an extra £1 billion from the public this year, fuelling speculation that prize rates and savings interest could be pushed higher to hit the new target. ^[1]

Today, regional and consumer outlets are splashing on a “£1 billion Premium Bonds change” that offers “real hope” for bondholders, while national titles report that the Treasury wants at least £1 billion more from savers via NS&I. ^[2]

Here’s what has actually changed, what hasn’t, and what it all means for your money right now.

Budget 2025: NS&I’s funding target raised by £1 billion

In Wednesday’s Autumn Budget (26 November), Chancellor Rachel Reeves increased NS&I’s net financing target for 2025–26 from £12 billion to £13 billion, with a tolerance band of plus or minus £4 billion. ^[3]

NS&I confirmed the new figure in an official update, stressing that the change is designed to complement gilt issuance by the Debt Management Office – in other words, it’s another way for the government to borrow from ordinary savers rather than financial markets. ^[4]

At the same time, NS&I published its provisional results for the first half of the tax year (April–September 2025):

Net financing so far: £3.9 billion
Q2 (July–September) net financing: £1.4 billion
Total NS&I savings stock: £243.9 billion

That means only around 30% of the £13 billion target has been reached, leaving just over £9 billion still to raise in the second half of the year. ^[5]

For context, NS&I delivered net financing of £9.8 billion in 2024–25, £11.3 billion in 2023–24 and £10 billion in 2022–23, so this year’s revised target is now significantly more ambitious than recent years. ^[6]

Why everyone is talking about a “£1 billion Premium Bonds change”

The £1 billion “change” that Leeds Live and other regional outlets are highlighting is the uplift in NS&I’s fundraising target – from £12 billion to £13 billion – not a confirmed £1 billion increase in the Premium Bonds prize pot itself. ^[7]

However, the reason this is being framed as a big moment for Premium Bonds is simple:

NS&I now has to raise more money from savers.
Premium Bonds are its flagship product with huge reach – over 24 million people hold them, with more than £127 billion invested. ^[8]
Historically, when NS&I needs more funding, it has often made its products more attractive – either by raising interest rates on bonds or increasing the Premium Bonds prize fund rate. ^[9]

A detailed analysis from MoneyWeek on 27 November argued that the higher fundraising target “could potentially” push NS&I to boost the Premium Bonds prize fund rate to bring in fresh cash, noting that the new ±£4 billion range allows NS&I to raise up to £17 billion without breaching its mandate. ^[10]

GB News today echoed that optimism, reporting that the funding shift offers “real hope” to Premium Bonds holders worried about recent cuts to the prize rate. ^[11]

Meanwhile, The Telegraph has reported that NS&I is “poised to raise interest rates” as the Treasury seeks an extra £1 billion from savers, reinforcing the idea that government-backed products could get more generous as the year progresses. ^[12]

Premium Bonds today: current prize rate, odds and December draw

Despite all the excitement, nothing has yet changed for existing Premium Bonds holders.

According to NS&I’s own rate tables as of 28 November 2025: ^[13]

Prize fund rate: 3.60% a year, variable
Odds of winning: 22,000 to 1 per £1 Bond each month
Tax treatment: all prizes are tax‑free
Holding limits: minimum £25, maximum £50,000 per person

Premium Bonds don’t pay conventional interest. Instead, NS&I pays that 3.6% into a central prize fund, which is then distributed via a monthly draw run by ERNIE (Electronic Random Number Indicator Equipment). ^[14]

A separate piece from The Independent today reminds savers that the December 2025 Premium Bonds draw will take place on Tuesday 2 December, with winning numbers published the following day on NS&I’s website and prize checker tools. ^[15]

So for now, your chances and potential winnings in the next draw are unchanged – but the pressure on NS&I makes a future tweak more likely than it looked a month ago.

British Savings Bonds: fixed rates quietly boosted above 4%

While Premium Bonds grab the headlines, the clearest immediate winner from NS&I’s strategy shift is actually its fixed‑term “British Savings Bonds” – the rebranded Guaranteed Growth Bonds and Guaranteed Income Bonds.

On 7 November, NS&I launched new issues of its 1‑, 2‑, 3‑ and 5‑year British Savings Bonds with significantly higher fixed rates for both growth and income options: ^[16]

Guaranteed Growth Bonds (Growth option)
- 1‑year: 4.20% gross/AER
- 2‑year: 4.10% gross/AER
- 3‑year: 4.16% gross/AER
- 5‑year: 4.15% gross/AER
Guaranteed Income Bonds (Income option)
- 1‑year: 4.13% gross (4.20% AER)
- 2‑year: 4.03% gross (4.10% AER)
- 3‑year: 4.09% gross (4.16% AER)
- 5‑year: 4.08% gross (4.15% AER)

These new issues replaced earlier bonds paying roughly 0.25–0.30 percentage points less, and are available to both new investors and customers reinvesting at maturity. ^[17]

NS&I itself framed the rises as part of a balancing act between:

offering competitive returns to savers,
protecting taxpayers, and
maintaining stability in the wider savings market,
all while hitting its financing target. ^[18]

Given that British Savings Bonds now pay over 4% with a 100% HM Treasury guarantee, experts see them as a key tool for NS&I to close the £9 billion funding gap if Premium Bonds are left unchanged. ^[19]

How the £1 billion uplift interacts with Reeves’s ISA and tax changes

Budget 2025 didn’t just target NS&I – it also reshaped the wider savings landscape:

From April 2027, the cash ISA allowance for under‑65s will fall from £20,000 to £12,000, though over‑65s keep the full £20,000 limit. ^[20]
Dividend and savings tax rates are set to rise, and personal tax thresholds will remain frozen until 2031, dragging more savers into tax on interest. ^[21]

Financial planners warn that cutting the cash ISA limit while increasing tax on savings interest could push more people towards tax‑free alternatives, including Premium Bonds and NS&I’s other government‑backed products. ^[22]

Seen through that lens, the £1 billion increase in NS&I’s target looks like part of a broader strategy:

Shrink the tax‑free shelter available in bank ISAs,
Channel more long‑term savings into investments and government‑backed products, and
Use NS&I to raise cheaper funding directly from households.

That helps explain why both The Telegraph and specialist titles like MoneyWeek are linking Reeves’s tax‑raising budget to the prospect of higher NS&I rates and a potential Premium Bonds prize fund uplift. ^[23]

What experts are saying today

Commentators are divided on how far NS&I will go – and how quickly.

MoneyWeek notes that NS&I has “more than £9 billion” still to raise and argues that raising the Premium Bonds prize fund rate is firmly “in the frame” if inflows remain weak, though it may first lean more heavily on its boosted fixed‑rate bonds. ^[24]
In today’s GB News coverage, Mark Hicks of Hargreaves Lansdown suggests the target uplift offers “real hope” for Premium Bonds holders, but warns that any move will have to be balanced against expectations of falling Bank of England base rates in 2026. ^[25]
NS&I itself is staying cautious, repeating only that it “regularly reviews” rates to balance the interests of savers, taxpayers and the financial sector – and confirming no Premium Bonds rate change as of this morning. ^[26]

In short: pressure is building, but there is still no guarantee that Premium Bonds returns will actually rise – and if the Bank of England starts cutting rates from December, the window for any increase could be relatively short. ^[27]

What this means for different types of saver

This is news, not personal advice – but here’s how today’s developments are likely to land with three groups of savers.

1. Existing Premium Bonds holders

The £1 billion target uplift makes it less likely we’ll see another cut to the 3.6% prize fund rate in the near term, because NS&I still needs to attract money, not deter it. ^[28]
There is a credible chance of a modest prize fund increase if inflows don’t pick up – but nothing is promised, and NS&I may instead choose to lean on fixed‑rate bonds. ^[29]
Remember that Premium Bonds are still lottery‑style: many savers never win, and an “average” holder can experience long dry spells even if rates rise. ^[30]

2. Savers considering fixed‑term bonds

NS&I’s British Savings Bonds now pay 4.10–4.20% fixed over one to five years, backed by a full government guarantee – more generous than they were only weeks ago and competitive with much of the market. ^[31]
The trade‑off is lack of access: you can’t withdraw early, so these are best suited to money you know you won’t need during the term. ^[32]

3. Easy‑access savers and ISA users

NS&I’s Direct ISA, Direct Saver and Income Bonds still pay between 3.26% and 3.55% – decent but no longer market‑leading at a time when some challenger banks still offer higher returns. ^[33]
With the cash ISA allowance cut to £12,000 for under‑65s from 2027, some savers may think harder about using Premium Bonds or fixed‑rate bonds alongside ISAs to keep more interest out of the tax net. ^[34]

Key takeaways for today

The headline change is the Budget‑driven increase in NS&I’s net financing target from £12 billion to £13 billion, not a confirmed rise in Premium Bonds prizes. ^[35]
NS&I has only raised £3.9 billion so far this year, leaving more than £9 billion to find – a gap that will shape its pricing decisions over the coming months. ^[36]
Premium Bonds remain at a 3.6% prize fund rate with 22,000‑to‑1 odds per £1 Bond, but analysts agree that the chance of a future uplift is now higher than it was before the Budget. ^[37]
British Savings Bonds have already been boosted to over 4% fixed, giving savers an immediate way to benefit from NS&I’s new incentives if they are happy to lock money away. ^[38]
Reeves’s cash ISA cuts and higher savings taxes from 2027 could push more money towards NS&I’s tax‑free or government‑backed options – exactly where the Treasury now wants an extra £1 billion. ^[39]

For now, the message for savers is to enjoy the genuinely improved outlook – especially if you like NS&I’s full government guarantee – but not to bank on a Premium Bonds windfall until NS&I actually announces a new prize fund rate.

Martin Lewis: What Are Premium Bonds and How Do They Work? | This Morning

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