How Will Premium Bonds Affect Estate Administration in 2025?

Premium Bonds are a popular savings option in the UK, but what happens to them when someone passes away? In 2025, changes in the budget have highlighted the importance of properly handling Premium Bonds during estate administration. Executors must understand the procedures for managing these tax-free investments to ensure compliance with the law and a smooth distribution of assets.

What Happens to Premium Bonds After Death?

When a Premium Bond holder dies, their bonds remain eligible for prize draws for up to 12 months after death. However, an executor must inform National Savings & Investments (NS&I) as soon as possible. Once notified, NS&I will freeze the bonds, preventing further purchases or changes to the account. Any winnings during this period will be paid to the estate.

Do Premium Bonds Form Part of an Estate for Inheritance Tax Purposes?

Yes, Premium Bonds are included in the deceased’s estate for Inheritance Tax (IHT) calculations. Tax may be payable on their value if the estate exceeds the IHT threshold of £325,000 (or up to £500,000 if the residence nil-rate band applies). Unlike some other investments, Premium Bonds do not offer direct tax exemptions for IHT.

How Can an Executor Access and Distribute Premium Bonds?

The executor must complete an NS&I claim form and provide either the probate or letters of administration if there is no Will. Once processed, NS&I will transfer the bond value to the estate’s bank account or allow eligible beneficiaries to reinvest in their names.

Are There Any New Budget Changes That Impact Premium Bonds in 2025?

The 2025 budget has emphasised the importance of timely estate administration, particularly concerning financial investments. While the tax-free status of Premium Bond winnings remains unchanged, the government has clarified that delays in reporting and claiming Premium Bonds could result in penalties for executors under the new estate compliance rules. Therefore, it is more crucial than ever for executors to act quickly.

How Can April King Legal Help?

At April King Legal, we provide expert guidance on estate administration, assisting executors in navigating the complexities of managing investments like Premium Bonds. Our tailored estate planning solutions ensure that your financial affairs are structured efficiently, potentially minimising Inheritance Tax liabilities.

For personalised advice, speak to one of our specialists without obligation by filling out the form below.

Get in Touch

Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal, financial, or professional advice. No responsibility is accepted for any action taken or not taken based on the content of this article. Readers should seek appropriate professional advice tailored to their circumstances before making decisions. April King Legal will not be held liable for any loss or damage arising from reliance on this information.