Anyone over 16 can buy Premium Bonds for a child under 16. You can deposit between £25 and £50,000 per child. Parents or legal guardians act as the “responsible person” who manages the account until the child turns 16. All winnings are 100% tax-free and backed by HM Treasury.
But is buying Premium Bonds for a child the best option for the current 2026/27 tax year?
Well, they can be a useful way to put money aside, but they are not automatically the best option for every child’s savings.
Let us look closely at how they work, the latest prize rates, and the alternative options available!
What are Premium Bonds?
Premium Bonds are run by NS&I (National Savings and Investments) on behalf of the UK government. Instead of earning regular interest, your money buys £1 bonds that are entered into a monthly prize draw to win tax-free cash prizes from £25 to £1 million.
The prizes are tax-free.
That makes Premium Bonds slightly different from an ordinary children’s savings account.
With a normal savings account, you generally receive interest on the money you have saved.
But with buying Premium Bonds, there is no regular interest payment. Your money remains invested in the Bonds, while you have the chance to win prizes.
Can You Buy Premium Bonds For A Child?
Yes. Anyone aged 16 or over can buy Premium Bonds for a child under 16. Previously, only parents and grandparents could buy Premium Bonds for a child. But that changed back in 2019.
Now,
- aunts
- uncles
- older siblings
- close family friends
- godparents
All of them can buy Premium Bonds for a child.
However, there is an important rule that you must know.
The child needs a parent or legal guardian to act as the responsible person until the child reaches 16.
NS&I sends relevant correspondence to that nominated parent or guardian. Then that responsible person looks after the Bonds during this period.
So, the person who pays for the Bonds and the person who manages them do not necessarily have to be the same person.
How Does the “Responsible Person” Role Work?
When buying Premium Bonds for a child, NS&I asks you to nominate a parent or legal guardian. This person controls the account until the child turns 16.
The responsible person handles:
- Proving the child’s identity and address if NS&I requests proof.
- Deciding whether prize money gets reinvested into more bonds or paid out to a linked bank account.
- Making withdrawals on behalf of the child if cash is needed.
Once the child turns 16, control transfers directly to them. NS&I will contact them to set up their own online login and security details.
What Are The Basic Rules for Children’s Premium Bonds?
As discussed above, Premium Bonds do not work like normal savings accounts. This is because with Premium Bonds you do not get paid a regular interest rate. Instead, every pound you put in buys a unique £1 bond number. Every single month, these numbers go into a massive prize draw. This prize draw is managed by ERNIE.
The prizes range from a small £25 payout all the way up to a life-changing £1 million.
Here are the basic facts for the 2026/27 tax year:
- Minimum investment: £25
- Maximum limit: £50,000 total per child
- Prize fund rate: 3.80% (variable annual rate)
- Odds of winning per £1 bond: 22,000 to 1
- Tax status: 100% tax-free
How To Actually Buy Premium Bonds For Children: Step-by-Step
The application process depends slightly on whether you are the child’s parent or someone buying them as a special gift.
Follow these exact steps to get started:
If You Are the Parent or Legal Guardian
- Step 1: Gather your details. You will need your own National Insurance number, bank details, and the child’s full name and date of birth.
- Step 2: Head to the NS&I website. Go directly to the official NS&I Premium Bonds application page.
- Step 3: Choose the child option. Select the option to open an account for a child under 16.
- Step 4: Complete the setup. Enter your details to register as the primary manager of the account.
- Step 5: Fund the account. Pay the initial investment (minimum £25) via a quick debit card payment or bank transfer.
If You Are a Grandparent, Relative, or Friend
- Step 1: Grab the parent’s info. You must ask the child’s parent or guardian for their full legal name, address, and contact details.
- Step 2: Apply online as a gift. Visit the NS&I Gift Page and select the “Gift Premium Bonds” option.
- Step 3: Enter the details. Fill in your own information as the donor, then input the child’s details and the nominated parent’s details.
- Step 4: Make the payment. Pay for the bonds securely online using your debit card.
- Step 5: Let the parent take over. NS&I will send an email or letter to the parent. The parent must log in, verify their identity, and officially accept management of the bonds.
What Happens After You Buy The Premium Bonds?
After you buy Premium Bonds from NS&I, you must wait a full calendar month before your unique bond numbers are entered into the monthly prize draw. For example, Bonds bought during November can enter the January draw.
If you are buying Premium Bonds as a birthday or Christmas gift, this is really worth remembering.
Buying them does not mean the child is immediately entered into the next available draw.
The parent or guardian responsible for the child will receive relevant correspondence about the Bonds. This includes information about prizes and transactions. This will happen until the child reaches 16.
Buying Premium Bonds vs Junior ISAs: Which Is Better?
When deciding where to save for a child’s future, Premium Bonds and Junior ISAs (JISAs) offer entirely different philosophies.
Both options protect your capital from UK tax. But they differ significantly in risk, investment limits, accessibility, and potential returns.
So is it smart to choose Premium Bonds over a Junior ISA (JISA) for the 2026/27 tax year?
Well, it depends entirely on what you want out of the money.
| Feature | Premium Bonds | Junior Cash ISA | Junior Stocks & Shares ISA |
| Guaranteed return | No | Yes (fixed or variable rate) | No |
| Tax-free | Yes | Yes | Yes |
| Access before 18 | Parent/guardian can cash in (until age 16) | No – strictly locked until age 18 | No – strictly locked until age 18 |
| Annual limit | Up to £50,000 total holding | £9,000 combined JISA limit (2026/27) | £9,000 combined JISA limit (2026/27) |
| Risk of losing value | Low, but no growth guaranteed | Very low | Can fall as well as rise |
A lot of families actually do both. They put the core “definitely growing” savings into a Junior Cash ISA, and treat Premium Bonds as the fun bit, a way for grandparents to give a memorable, slightly exciting gift without needing to open a new account every year.
There’s nothing wrong with that approach at all, as long as you go in understanding what each product is actually for.
Quick Summary: Buying Premium Bonds for Children
- Anyone aged 16 or over can buy Premium Bonds for a child under 16
- Minimum purchase is £25, maximum holding is £50,000 per child
- A parent or legal guardian must be nominated to manage the bonds until age 16
- Current prize fund rate is 3.80%, odds are 22,000 to 1 per £1 bond (August 2026 draw)
- Prizes are entirely tax-free, ranging from £25 to £1 million
- There’s no guaranteed return, unlike a Junior Cash ISA
- Child gets full control of the account at age 16
- Junior ISAs allow up to £9,000 in the 2026/27 tax year and may suit families wanting guaranteed growth alongside Premium Bonds
The Bottom Line
Buying Premium Bonds for Children can be a thoughtful and tax-efficient way to give money that is genuinely theirs. They are secure, easy to gift and could produce tax-free prizes. But the return is uncertain, so they should not be confused with an interest-paying account.
If the aim is a bit of fun, flexibility and a long-lasting gift, Premium Bonds are a solid option.
If the aim is a reliable return or a bigger pot for adulthood, compare them with children’s savings accounts and Junior ISAs before committing larger sums.
How Accotax Can Help
Sorting out savings, gifts and tax planning for your children doesn’t need to be something you figure out alone at 11pm with too many browser tabs open.
At Accotax, we help families and individuals understand how different savings products, including Premium Bonds, ISAs, and other investments, fit into their wider financial and tax position.
Get in touch with our team if you’d like a proper chat about your family’s savings and tax position.
Disclaimer: The figures and rules in this guide are based on the UK position applicable to the 2026/27 tax year and information available in August 2026. Savings rates, Premium Bond prize fund rates and NS&I rules can change, so current NS&I and HMRC guidance should be checked before making a significant financial or tax decision.
