- Yes. Premium Bonds count as capital for Universal Credit at their face value (the amount you invested). If the total takes you above £6,000 combined with other savings, the tariff income rule reduces your UC. If combined capital reaches £16,000 or more, UC is normally not payable.
- Prize winnings from Premium Bonds also count as capital once they are paid into your account.
How Premium Bonds are valued for UC
Premium Bonds have a face value of £1 per bond. DWP counts them at face value, not at any notional prize probability. Holding £10,000 in Premium Bonds means £10,000 of capital for UC purposes, regardless of what prizes they might generate.
If you receive a prize, the prize money is treated as income when it arrives in your bank account, then typically treated as capital once it has been in the account for a full assessment period.
The £6,000 and £16,000 thresholds in practice
A single person with £7,500 in Premium Bonds and no other savings: £7,500 − £6,000 = £1,500 above the threshold. £1,500 ÷ £250 = 6 complete bands × £4.35 = £26.10/month assumed income. UC is reduced by £26.10/month.
A couple with £8,000 Premium Bonds and £9,000 in a joint savings account: combined capital £17,000, above the £16,000 limit. UC is not normally payable.
Cashing in Premium Bonds
If you cash in Premium Bonds to spend on legitimate living costs, the capital reduces and your UC may increase. However, if you cash them in and immediately transfer the money to a family member to get below the threshold, DWP could treat the transfer as deprivation of capital and assume you still hold the funds.
Normal spending on household costs, bills and everyday expenses is not deprivation of capital. Large sudden transfers shortly before a claim or review are more likely to be questioned.