What is NS&I and How Does It Work?

Dave Jangid | Debitam By Dave Jangid |
National Savings and Investments

NS&I is the shortened term for National Savings and Investments, a financial services organization owned by the UK government. NS&I aims to help individuals save money securely and also provide funding for the government's borrowing needs. NS&I is HMRC-backed, the only government-backed bank.

NS&I works by offering a range of savings and investment products with competitive interest rates that are backed by the Treasury. This means that when you invest your money with NS&I, it is considered as safe as investing in UK government bonds. Additionally, the interest earned on NS&I products is tax-free for UK residents.

What are the Saving and Investment Options with NS&I?

NS&I offers a variety of savings and investment options to suit different financial goals and risk appetites. Some of the popular products include:

  • Premium Bonds: These are a type of savings bond where instead of earning interest, you have the chance to win tax-free cash prizes every month. We`ll explain this bit more in depth below.
  • Income Bonds: As the name suggests, these bonds provide a regular income through monthly interest payments.
  • Direct Saver: This is a simple savings account that offers easy access to your money with competitive interest rates.
  • Junior ISA: NS&I also offers a tax-free savings option for children aged under 18, called the Junior Individual Savings Account (ISA).
  • Guaranteed Growth and Income Bonds: These are fixed-term bonds with guaranteed rates of interest over the term.
  • Index-linked Savings Certificates: These offer a tax-free and inflation-beating return on your investment over a fixed term.

What is a Premium Bond?

Premium Bonds are one of the most popular products offered by NS&I. They are essentially a type of savings bond where instead of receiving interest on your investment, you have the chance to win tax-free cash prizes every month. The minimum investment in Premium Bonds is £25, and you can invest up to £50,000 per person.

The prizes range from £25 to a jackpot of £1 million, and there is a monthly prize draw where the winners are randomly selected by an electronic machine called ERNIE (Electronic Random Number Indicator Equipment). The odds of winning any prize in the Premium Bonds draw are currently 34,500 to 1 for every £1 bond you hold.

How to File Tax Return on NS&I?

As mentioned earlier, the interest earned on NS&I products is tax-free for UK residents. This means that you do not need to include any income from NS&I on your self-assessment tax return.

However, if you have investments in NS&I products that are not held in an ISA or Premium Bonds, and the total interest received in a tax year exceeds your personal savings allowance, you may need to pay tax on the interest earned. In this case, HMRC will provide you with a statement of interest earned from NS&I which you can use to complete your tax return.

NS&I products like Junior ISA, Premium Bonds, Cash ISA and Index Linked Saving Certificates are not objected to capital gains tax or income tax.

How to get NS&I Products?

NS&I products can be easily purchased online through the NS&I website or by phone 08085 007 007.

You can also invest in Premium Bonds through standing orders, bank transfers, and even using your existing NS&I account balance.


In summary, NS&I offers a range of savings and investment options with competitive interest rates that are backed by the UK government. The tax-free status of many NS&I products makes them an attractive choice for savers and investors. With easy access to their products through online or phone services, NS&I provides a secure and convenient way to save and invest money. So, why not consider NS&I for your financial goals and start earning tax-free returns today? Keep reading our blog to learn more about different savings options and investment strategies. Happy saving!

Dave Jangid | Debitam By Dave Jangid |
Note: Please note that the content of the above blog and the aforementioned information are solely for the purpose of awareness and are informative in nature. The content is designed with intent to ease the understanding while preserving the essence and importance of the compliance rules and shall not be considered as an ultimate replication of the rules. Debitam does not own any responsibility whatsoever for any unpleasant event that may arise due to the misinterpretation of a specific part or whole of the information.

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