Another £10,000 Flutter?

The investment limit for premium bonds has increased by £10,000.

One of the minor surprises of this year’s Budget was the Chancellor’s rediscovery of National Savings & Investments (NS&I) as a way of raising money. In past years NS&I had been largely neglected, not least because it was cheaper to raise the billions the government needed by selling gilts to institutional investors.

Cynics might remark that the Chancellor’s new interest in individual savers has more to do with the approaching General Election than financing the Treasury’s black hole, but anything which brings a little more competition into the deposit market is to be welcomed. June marks the start of three initiatives focused on Premium Bonds, with the investment limit being increased from £30,000 to £40,000. In August the number of £1 million monthly draws will double – to two – and in the next tax year the investment limit will be upped again, to £50,000.

Before you rush off to top up your holdings, it is worth noting a few points which probably will not be included in NS&I’s promotion of the increased limit:

With an ISA cash limit more than doubling to £15,000 a year from 1 July, it will be interesting to see how much NS&I can attract in new bond holdings.