NS&I vs Gilts: Which UK Investment Is Best?
NS&I just cut its Premium Bonds prize fund rate to 3.30% with effect from the April 2026 draw — the second cut in twelve months. In the same week, the UK 30-year gilt yield touched 5.78%, the highest since 1998, before settling at 5.62% on 7 May. The 10-year gilt eased to around 4.9%. That gap — between what HM Treasury pays you through NS&I and what HM Treasury pays you through the gilt market — is now the widest it has been in years, and it changes the answer to this question for most savers. Both NS&I products and UK gilts carry the full backing of HM Treasury. Both sit above the £85,000 FSCS cap that limits bank-deposit protection. But with UK CPI running at 3.3%, Bank Rate held at 3.75%, and the gilt curve repricing the entire "higher for longer" story, the choice between them is no longer a tie. For higher-rate taxpayers buying gilts directly, the after-tax gap over NS&I now exceeds 200 basis points on the long end. For basic-rate savers, Premium Bonds at 3.30% tax-free still beat a taxed 4.9% gilt — but only just, and only if you actually have unused Personal Savings Allowance. This is what each product pays you today, what each costs you in tax, and which one belongs in which pot of your money.