Split the pot

Split the pot: the best split earns £1,595 a year in a typical year vs £1,525 for your current set-up (+£70). A savings account needs 6.02% AER to match your Bonds after your tax.

Best split for your £40,000

Plan	Cash ISA	Savings	Bonds	Tax on interest	Typical year	Average year
Current	£0	£0	£40,000	£0	£1,525	£1,740
Best split	£20,000	£4,444	£15,556	£0	£1,595	£1,717
All out of Bonds	£20,000	£20,000	£0	£280	£1,460	£1,460
Max Bonds (£50k cap)	£0	£0	£40,000	£0	£1,525	£1,740

Typical year uses the median Bonds outcome for that holding size (smoothed across simulations); average uses the headline prize rate. Bonds prizes are tax-free.

Your £40,000 of Bonds over 12 draws

1 in 10 bad year		£1,050
1 in 4		£1,225
Typical (median)		£1,500
Average		£1,740
1 in 4 good		£1,850
1 in 10 good year		£2,275

Chance of no prize at all in a year: 0%. Based on 6,000 simulated years using NS&I's October 2026 prize table (live), odds 21,000 to 1, implied rate 4.35%.

Typical-year rate by holding size

£500
0.00%

£1,000
0.00%

£2,000
2.50%

£5,000
3.00%

£10,000
3.50%

£20,000
3.62%

£30,000
3.67%

£40,000
3.81%

£50,000
3.81%

Small holdings usually win far less than the headline rate because most of the prize fund goes in rare big prizes.

Your tax on extra interest (2026/27)

You're a higher-rate taxpayer. Personal Savings Allowance £500; starting rate for savings left £0. You can still earn £200 of interest tax-free this year; after that each extra £ is taxed at 40%. To beat your Bonds, a savings account would need 6.02% AER.

Next steps

Open or top up a cash ISA with £20,000 (you said £20,000 of this tax year's £20,000 allowance is left). Pick a flexible ISA if you may need the money back.
Put £4,444 in your easy-access account at 4.5% AER. The first £200 of interest this year is tax-free for you; after that it's taxed at 40%.
Cash in £24,444 of Premium Bonds. Ask straight after the monthly draw (first working days of the month) so you don't give up a draw you're already in; money normally reaches your bank in about three working days.
Expect lumpy results: on your planned £15,556 in Bonds there's a 0% chance of no prize at all this year, and a 1-in-10 year pays under £300.
Diary a re-check for the next NS&I rate change and for 6 April (new tax year: allowances reset).

Inputs: Bonds £40,000, new cash £0, income £60,000, other interest £300, savings 4.5%, ISA 4.2%, ISA left £20,000, typical basis. Report sample · Markdown · JSON · created 2026-10-13T12:34:36.628Z