What happens to Premium Bonds when someone dies in the UK

Premium Bonds are one of the most commonly forgotten assets in bereavement administration. More than one in three UK adults holds them. Over £120 billion is invested in total. Many holders bought bonds decades ago, never won anything, and stopped thinking about them. Families often have no idea the bonds exist until something surfaces in a drawer or a warrant arrives from NS&I addressed to someone who has died.

When the holder dies, Premium Bonds do not pass to anyone automatically. They cannot be transferred into a beneficiary's name. They sit outside the Tell Us Once service, which means no government notification will reach NS&I. The executor has to contact NS&I directly, and has a decision to make about whether to cash the bonds in immediately or leave them in the monthly prize draw for up to a year.

This guide explains how the process works, what the options are, and what the executor actually needs to do.

The basics

Premium Bonds are issued by National Savings and Investments (NS&I), the government-backed savings agency. Each £1 Bond has a unique number that is entered into a monthly prize draw. Prizes range from £25 to £1 million, all tax-free. From April 2026, the prize fund rate is 3.30% and the odds on each £1 Bond winning in a given month are 23,000 to 1.

Holdings run from £25 up to a maximum of £50,000 per person. Bonds cannot be held jointly. They cannot be transferred to anyone else during the holder's lifetime, and they cannot be transferred to a beneficiary on death. This is the point most families are surprised by. There is no option for a beneficiary to keep the bonds as they stand. The bonds always have to be encashed and the proceeds paid into the estate.

What happens from the date of death

Once NS&I is told the holder has died, the account is frozen. No new bonds can be bought, and any automatic reinvestment of prizes stops. Prizes won before the date of death form part of the estate and are counted in the probate valuation. Prizes won during the period after death are treated as income to the estate rather than part of the date-of-death holding.

The bonds stay in the monthly draw for up to 12 months from the date of death, then must be encashed. The executor can encash them earlier if preferred.

Any prize won during the 12 months post-death is paid by warrant (similar to a cheque) to the person entitled to the money, normally the executor. Prizes cannot be paid by bank transfer during this period, and they cannot be held back and paid out together at the end. Each warrant is issued separately, month by month, which catches some families out when three or four envelopes arrive over the year.

When probate is required

NS&I operates a £5,000 threshold. If the total value of everything the deceased held with NS&I (Premium Bonds plus any other NS&I products such as Income Bonds, Direct Saver, or Direct ISA) is £5,000 or more, a grant of probate or letters of administration is needed before NS&I will release the money.

If the total is below £5,000, NS&I can release funds on the basis of the death certificate and the completed claim form alone. A small estate declaration may be required.

NS&I reserves the right to ask for a grant at any holding level. In practice, this is rare below the threshold.

For the wider context on when probate is needed, see our guide on what is probate.

The executor's two options

Once NS&I has been notified, the executor chooses between two approaches.

Cash in immediately. Complete the bereavement claim and request the bonds be encashed. The money is paid to the estate, usually within two to three weeks once NS&I has what it needs. This is the faster route to distribution. The bonds are only entered into the draw for the month they are encashed, so additional prizes are unlikely.

Keep them in the draw. Leave the bonds in the monthly draw for up to 12 months. Prizes won during this period are paid to the estate. At the end of the 12 months, or sooner if the executor chooses, the bonds are encashed and the principal is paid in.

The trade-off is between speed and expected return. For a modest holding (£1,000 or below), the expected value of keeping the bonds in for a year is close to nothing. For the maximum £50,000 holding, it could be a few hundred pounds on average, though still uncertain. Most executors of modest estates cash in straight away to simplify the administration. Larger estates are sometimes worth keeping in play.

What to do if you do not know whether they had Premium Bonds

This is common. Bonds can have been bought decades ago, gifted by a parent or grandparent, or simply forgotten. The paper certificates may have been lost. The holder may never have logged in online. Given that roughly one in three UK adults holds Premium Bonds, the default assumption when administering an estate should be that some may exist.

NS&I runs a tracing service. To make a trace request, the executor submits the deceased's full name, date of birth, last known address, and any previous addresses NS&I might have on file. National Insurance number and any known holder's numbers help. NS&I searches its records and writes back with whatever it finds.

A trace request can be made on its own, before any other claim, if the executor simply wants to check whether Premium Bonds existed. It costs nothing and does not commit the estate to anything. It can also be run through the broader My Lost Account service, which covers NS&I alongside banks and building societies.

Check for unclaimed prizes as part of the same process. Prizes do not expire. NS&I currently holds over £100 million in unclaimed Premium Bond prizes, spread across roughly 2.6 million individual wins. The public prize checker at nsandi.com covers the last 18 months. Older prizes are listed in the London Gazette Premium Bonds Unclaimed Prizes Supplement, published quarterly. Old bond numbers that were never checked may have prizes waiting from ten or twenty years ago.

Premium Bonds held for a child

If the deceased was the registered nominated parent or guardian of Premium Bonds held for a child under 16, the bonds themselves are the child's property, not part of the deceased's estate. A new nominated parent or guardian must be set up with NS&I, usually the other parent or, if there is no one, a legal guardian. The bonds continue in the draw in the child's name as before.

If the child was over 16 and managing their own bonds, the question does not arise.

This is worth checking as part of the tracing process, because a grandparent buying bonds for a grandchild is a common pattern. The grandparent may have been listed as nominated guardian, and without an update the bonds can become stuck.

Inheritance tax and Premium Bonds

Premium Bond holdings are included in the estate for inheritance tax purposes at their face value on the date of death. Any prizes announced before death are included too. Prizes won during the 12 months after death are treated as estate income rather than part of the probate valuation, so they do not push the date-of-death estate value up.

Premium Bonds do not qualify for any special inheritance tax relief. They are tax-efficient during the holder's lifetime (winnings are free of income tax and capital gains tax), but offer no advantage in estate terms.

How to make the claim

The bereavement claim is made through NS&I directly, either online or by post.

The online form at nsandi.com is the faster route. The executor completes it with the deceased's details, the NS&I holder's number (if known), and the executor's own details. A copy of the death certificate is uploaded. NS&I will confirm whether a grant of representation is needed and, if so, will request a certified copy once it is available.

The postal route involves printing and completing the NS&I claim form, including the death certificate and the will if applicable, and posting the pack to NS&I. This takes longer, usually two to four weeks for acknowledgement alone.

NS&I aims to complete most claims within 14 days of receiving all the documentation it needs, though current service notices indicate longer timelines in practice. Complex cases (missing holder's number, disputed executorship, bonds held for a child) take longer still.

Common mistakes

A few things come up repeatedly with Premium Bonds.

Assuming Tell Us Once covers NS&I. It does not. NS&I is a government-backed agency but sits outside the Tell Us Once service, so families who have used Tell Us Once and assume "the government has it" are often surprised weeks later when a prize warrant arrives.

Missing the bonds altogether. Given the scale of UK holdings, the default assumption when administering any estate should be that Premium Bonds might exist. A tracing request costs nothing.

Trying to transfer bonds to a beneficiary. Not possible. The bonds can only be encashed. If a beneficiary wants to hold Premium Bonds, they have to buy their own in their own name, using their own money (including any inheritance they receive from the estate).

Forgetting the unclaimed prize checker. Old bond numbers never checked may have prizes waiting. A deceased holder who moved house and did not update NS&I may have accumulated winnings the family knows nothing about.

Cashing in too early. If the deceased held other NS&I products alongside Premium Bonds and the total is over £5,000, probate is needed. The executor should confirm the full NS&I position before encashing anything, so the claim can be handled in a single process.

If this is more than you can manage

Identifying every account the deceased held (including Premium Bonds and other NS&I products, old cash ISAs, dormant bank accounts and lapsed policies) is one of the harder parts of estate administration. Most families find some of them only after weeks of sorting through paperwork. Some never find them at all.

Legacy Trail finds the accounts the deceased held and notifies each provider centrally, including NS&I, so you do not have to track down and contact each one separately.