NS&I Premium Bonds - Where to enter

Q - Where does one enter NS&I premium bonds? 

A - Because the monthly draw on Premium Bonds has lots of levels of tax-free winnings from £100 upwards, there has always been the idea that, with a large enough holding, you can generate a certain level of (albeit very variable) tax-free return with always the remote chance of a big win.

While we don’t explicitly model premium bonds, the holding could be entered into Voyant as a savings account with a 0 net growth rate, probably labelled with a name indicating that this is an NSI Bond.

Prizes could then be entered and scheduled as non-taxable inflows on either the Other Income or Windfalls screens. Both screens are good catchalls for tax-free inflows.

Further to this, I can think of one easy way to model the variable winnings, using the Other Income screen. Consider setting Other Income initially at £0 pa in the Income £ field.

Select Non-Taxable at the taxation setting for the income.

On the Time panel, located on the right side of the Other Income screen, select the Event tab. Select a start event (green dot) to indicate when the bond becomes active in the plan (select Start if held by the client currently) and select an end event (red dot) to indicate when/if the bond will be liquidated. These start and end events will determine the time span over which year-to-year tax-free winnings might be earned.

Next, go to the Tabular Entry panel.

In the Income column, select the various years in which the winnings will be earned. Enter the amount for each year.

NOTE: As you enter each amount, be sure to click ENTER on your keyboard to commit each value to the panel.

The line graph will adjust accordingly.

You may also click the Fill button, which would auto-populate the table with values from your first year of actual income (above £0 pa) and then edit the values in the Income column.

Another option would be to average your estimate of the possible income as a regular annual income.

If you want to consider the default to be no-winnings, you could model, using a what-if scenario, what might happen to the plan if the client does receive a large one-off win from the bond.