Our range / Children's Bonus Bonds /

How they work

Whether you’re looking to invest for your own child or someone else’s, Children’s Bonus Bonds can help you build up a valuable nest egg for the child’s 21st birthday or before.

You simply invest a lump sum and we’ll add interest each year, along with a bonus every five years until the child’s 21st birthday, all tax-free. "Tax-free" means you don't have to pay any UK Income Tax or Capital Gains Tax. And you can invest in as many issues as you like, up to £3,000 per issue for each child.

• Issues
• Investment limits
• Interest and bonus
• Who can buy Bonds
• Tax
• Access
• Cheque clearance 
• Who controls the Bonds
• Can I buy Bonds as a gift?
• About the terms and conditions
• Protecting your personal information
• Banking Code

Issues

Children’s Bonus Bonds are available in issues and each has its own rate of return. You can check the interest rate of the current issue here, or pick up our interest rates leaflet from any Post Office® branch.

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Investment limits

Up to £3,000 can be invested for a child in each issue of Children’s Bonus Bonds, in units of £25. Each time we bring out a new issue, you can invest again up to the limit of £3,000. This can really add up over time – if, for example, there were an average of four issues per year, you could invest up to £12,000 a year for the child.

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Interest and bonus

For five years, the child’s Bond will earn interest at a fixed rate. Then on the fifth anniversary we’ll add a bonus, which is fixed and guaranteed at the outset. At that point, the parent (or the child, if 16 or over) can decide whether to cash in the Bond or leave it invested – we’ll give them details of the next guaranteed rate and bonus to help them decide what they want to do.

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Who can buy Bonds

Anyone aged 16 or over can buy Children’s Bonus Bonds for children under 16. We will always send the Bond to the child’s parent or guardian, who will control the Bond until the child is 16, regardless of who bought it.

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Tax

Normally if a parent gives their child money to invest, the parent is liable to tax on the interest if it comes to over £100 in any tax year, even if the child isn’t a taxpayer. But with Children’s Bonus Bonds the interest and bonuses are all completely free of UK Income Tax and Capital Gains Tax. Even if the child starts work and becomes a taxpayer before cashing in their Bonds, they still won’t have to pay tax on the interest.

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Access

To qualify for bonuses, Bonds have to be held until a five-year anniversary or until the child is 21. However, if the child needs access to the money earlier, all or part of the Bond can be cashed in without notice. No interest is earned if a Bond is cashed in within a year of purchase. 

The person who controls the Bond can cash in units of £25, which will be repaid along with any interest and bonuses earned. If a Bond is cashed in between anniversary dates, it will earn interest daily from the last anniversary, and will stop earning interest on the day of repayment.

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Cheque clearance

If you buy your Bond by cheque, your payment will be cleared on the 7th working day (ie excluding weekends and English bank holidays). Bonds can only be cashed in after your payment has cleared.
 
For example, if we receive your cheque on a Monday, your payment will be cleared on the Tuesday of the following week. Allow one additional day for each English bank holiday.

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Who controls the investment?

Children’s Bonus Bonds are owned by the child, but until their 16th birthday the Bond is ‘controlled’ by their parent or guardian, regardless of who bought it. This means only the parent or guardian can cash in the Bond, but the money still belongs to the child. Once the child is 16, they control the Bond themselves.

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Can I buy Bonds as a gift?

Yes you can buy Children’s Bonus Bonds as a gift for someone else’s child. To show who the gift is from, we will print your name on the Bond (unless you ask us not to). When buying a Bond for someone else’s child, please check with the parent or guardian that your gift won’t take the child’s investment in that issue over the maximum limit.

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About the terms and conditions

Please read the terms and conditions before you invest. If we make any changes to the terms and conditions after you invest, we will let you know. If any change is to your disadvantage, we will tell you personally at least 30 days before the change. In this case you can switch to another product or cash in your Bond, without notice or penalty, within 60 days of us telling you. For any other changes, we will let customers know by putting a notice on our website and in a range of national newspapers.

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Protecting your personal information

When you become a customer of ours, we will treat all the personal information we hold about you as private and confidential. Click here for details on our privacy policy.

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Banking Code

National Savings and Investments subscribes to the Banking Code and has a formal complaints procedure with an independent arbitration scheme. Click here for further details of the Code or our complaints procedure.

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