NS&I Fixed-Rate Bonds Now Pay Up to 5.17%

NS&I has raised the rates on all four of its fixed-term British Savings Bonds from today, 6 October 2026. The new issues pay 4.99% for one year, 5.07% for two, 5.10% for three and 5.17% for five — the first time the two-, three- and five-year bonds have all paid above 5%.

The rises apply to both versions of the bond: Guaranteed Growth Bonds, which add interest annually and pay it out at maturity, and Guaranteed Income Bonds, which pay interest monthly into your bank account. New and maturing customers get the new rates.

The new NS&I rates

Minimum £500, maximum £1 million per bond. No withdrawals before maturity — not even with a penalty.

How they compare

NS&I now beats every big-name bank and building society on two-, three- and five-year fixes, and sits just behind on one year. It still doesn't top the market at any term.

Rates correct at 6 October 2026. On £20,000 over five years, the gap between NS&I and DF Capital is about £265 in interest. Whether that buys you anything depends on what you value: the challenger banks are FSCS-protected to £120,000 per banking licence, NS&I is backed by the Treasury with no ceiling.

Why NS&I keeps raising rates

This is the fourth increase to the British Savings Bonds since the summer, and it isn't generosity. NS&I has to raise £15 billion of net financing for the Treasury this financial year. In the first quarter it managed £1 billion. The rush into cash ISAs ahead of the April 2027 cap — £12,000 for under-65s — pulled money away from NS&I just as online banks pushed fixed rates higher, so NS&I has been playing catch-up with bond rate rises and two Premium Bonds prize-rate boosts.

Two things follow. Rates on new issues can be pulled the moment NS&I is back on track, so if you want one, don't assume it'll be there next month. And the rate you lock in today is yours for the full term regardless of what NS&I does next.

The tax catch

Interest on these bonds is taxable, unlike Premium Bonds prizes. What matters is when it's taxed, and that's where the two versions differ.

Guaranteed Income Bonds pay monthly, so the interest is taxed in whichever tax year you receive it. Guaranteed Growth Bonds hold the interest until maturity, so the whole lot lands in one tax year. Put £30,000 in the five-year Growth bond today and roughly £8,600 of interest arrives in October 2031, all taxable in 2031/32. That wipes out your personal savings allowance (£1,000 basic rate, £500 higher rate, nil additional rate) in one go and can push you into a higher band for that year.

There's a second timing issue. Tax on savings interest rises by two percentage points from 6 April 2027, to 22%, 42% and 47%. A one-year Growth bond opened today matures in October 2027, so every penny of its interest is taxed at the new rates. For a higher-rate taxpayer with £20,000 in it, that's £998 of interest, £209 of tax, £789 kept — an effective 3.95%. Any one-year fixed cash ISA paying more than that beats it, and you can still put the full £20,000 into a cash ISA until 5 April 2027. Compare fixed cash ISAs.

Who these bonds are for

• Savers with more than £120,000 to fix. Treasury backing with a £1 million limit per bond is the one thing no bank can match.

• Anyone who wants a big name and a guaranteed return. NS&I now out-pays Skipton, Tesco, MBNA and the high-street banks on most terms.

• Non-taxpayers and those with unused personal savings allowance. The headline rate is what you keep.

If you pay tax and have cash ISA allowance left, do the ISA first. If you're chasing the highest rate and are comfortable with a smaller bank under FSCS cover, the market tops are 0.1 to 0.2 points higher at every term — see the full fixed-rate table. And if you'd rather keep access, NS&I's own Premium Bonds pay a 4.35% prize-fund rate, tax-free, which beats these bonds after tax for most higher-rate payers.

NS&I's full range is on its DepositScout provider page. Set a rate alert if you want to know the moment any of these move.