As an independent financial adviser in the UK, we have been fielding clients’ questions about the new NS&I British Savings Bonds.

These government-backed products offer fixed-term savings with guaranteed returns, but are they the right choice for you? Let’s delve into the details.​

What Are NS&I British Savings Bonds?

NS&I’s British Savings Bonds are fixed-term savings products, available in two formats:​

  • Guaranteed Growth Bonds: Interest is compounded annually and paid at maturity.

  • Guaranteed Income Bonds: Interest is paid monthly into a nominated bank account.​

As of April 2025, the available terms and corresponding interest rates for the growth bond are:​

Growth                                             Income

  • 1-year: 4.05% gross/AER            3.98% Gross

  • 2-year: 4.00% gross/AER           3.93% Gross

  • 3-year: 4.10% gross/AER            4.03% Gross

  • 5-year: 4.06% gross/AER​           3.99% Gross

Investments range from a minimum of £500 to a maximum of £1 million per person.

Pros of NS&I British Savings Bonds

1. Government-Backed Security

Unlike traditional bank savings, which are protected up to £85,000 under the Financial Services Compensation Scheme (FSCS), NS&I products are 100% backed by HM Treasury. This makes them an attractive option for clients seeking absolute security, especially those with substantial savings.

2. Competitive, Fixed Returns

While not market-leading, fixed rates offer stability in a fluctuating interest rate environment. This can appeal to clients who prioritise predictable returns over chasing higher but variable rates.​

3. High Investment Limits

The £1 million cap per person allows high-net-worth individuals to invest significant sums securely, surpassing the FSCS limit offered by other institutions.

Read about picking the right ISA.

Cons of NS&I British Savings Bonds

1. Lower Rates Compared to Market Leaders

Current market-leading fixed-term accounts offer higher rates:​

  • 1-year: Up to 4.65% AER

  • 2-year: Up to 4.40% AER

  • 3-year: Up to 4.45% AER

  • 5-year: Up to 4.56% AER​

Clients seeking maximum returns might find better opportunities elsewhere.

2. Taxable Interest

Interest earned is taxable in the year the bond matures, potentially impacting higher-rate taxpayers. Clients should consider their Personal Savings Allowance and overall tax situation.

3. Lack of flexibility

Funds are locked in for the duration of the term, with no option for early withdrawal. Clients needing liquidity should assess their short-term cash flow needs before investing.

Are they worth it?

NS&I British Savings Bonds are suitable for clients who:​

  • Prioritise capital security over maximum returns

  • Have substantial savings exceeding FSCS limits

  • Seek fixed, predictable income or growth

Clients focused on maximising interest earnings and comfortable with the standard FSCS protection may benefit from exploring higher-yielding alternatives..

Final Thoughts

While NS&I British Savings Bonds offer unparalleled security and decent returns, they may not be the optimal choice for every client. It is important to assess your financial goals, risk tolerance, and liquidity needs.​

For more information on NS&I products, visit their official website:

Note: This blog is for informational purposes only and does not constitute financial advice. Always conduct thorough research or consult a financial professional before making investment decisions.