NS&I allow US Citizens to invest with them

When we first moved back in 2016 and bought a house the following year I was looking for safe places to keep money and NS&I had some good offerings above the usual savings rates. At the time US Citizens, even resident in the UK, were not allowed as it was considered a waste of taxpayers money to become FATCA compliant. I checked with them this week and they now do allow USC's to open accounts.  I tested it by opening an online account and I got prompted and was able to enter the USA as a country plus my tax id (SSN).

Of course they don't have the good rates they were offering a couple of years ago with their Growth Bonds but the current government is upping spending and I expect a new government would maintain or increase the spending so perhaps more borrowing will prompt NS&I to offer some better rates in the near future.

When we first moved back in 2016 and bought a house the following year I was looking for safe places to keep money and NS&I had some good offerings above the usual savings rates. At the time US Citizens, even resident in the UK, were not allowed as it was considered a waste of taxpayers money to become FATCA compliant. I checked with them this week and they now do allow USC's to open accounts.  I tested it by opening an online account and I got prompted and was able to enter the USA as a country plus my tax id (SSN).

Of course they don't have the good rates they were offering a couple of years ago with their Growth Bonds but the current government is upping spending and I expect a new government would maintain or increase the spending so perhaps more borrowing will prompt NS&I to offer some better rates in the near future.

I made an investment with NS&I four months ago.   I was already maxed on my cash ISA contributions, and I am not getting very much interest on other savings, so I put the rest in premium bonds.    My husband then did the same.  He has won £25 every month.  I've won nothing.  But, between us, it's still better than the lack of interest at Lloyds, etc.

I made an investment with NS&I four months ago.   I was already maxed on my cash ISA contributions, and I am not getting very much interest on other savings, so I put the rest in premium bonds.    My husband then did the same.  He has won £25 every month.  I've won nothing.  But, between us, it's still better than the lack of interest at Lloyds, etc.

I do use Premium Bonds as they were not subject to the USC restriction. Last month I won $550 (£500 + 2 x £25). This year the effective interest rate for me is already 2.07% as I also have several other £25 prizes. Last year I won some prizes for an overall rate of 1.7%. Beginners luck I'm sure.

There was a good article on Premium Bonds in Which? last month. I use them as our "rainy day fund" as it is very easy to put money in and out, and is backed by the Treasury.

https://www.which.co.uk/news/2019/08/premium-bond-winners-august-2019-should-you-buy-bonds-for-children/

The NS&I estimates that a person with average luck could earn a return of 1.4% over a year. There’s no guarantee of this, however: while a lucky few will win much more, many will win less or nothing at all. If you hold £10,000 or more in bonds, your probability of winning at least one prize in a 12-month period is upwards of 99.99% – although the prize could be as little as £25, which would equate to a return of just 0.25%.

I've got the majority of my savings in a cash ISA which is on a fairly good interest rate, so I want to leave that where it is.  Meanwhile, my piddly premium bond 'investment' hasn't performed at all (my husband's larger premium bond investment has outperformed my ISA).  Plus, when/if my premium bonds pay out, I'll owe a sizable chunk of my winnings to IRS, whereas my husband's winnings are tax free.  I'm considering gifting my non-ISA money to my husband so he can invest it and reap the rewards freely.  The only reason I haven't done it yet is because I like knowing I have a chance of winning.  I'd worry that I have a gambling problem, except premium bonds aren't gambling. 

I'm always on the lookout for savings rates that are protected.  (I'm extremely risk-averse!).  I'll keep an eye on NS&I's other offerings.  I'm checking their site to see if I've won every month, anyway. 

I'm always on the lookout for savings rates that are protected.  (I'm extremely risk-averse!).  I'll keep an eye on NS&I's other offerings.  I'm checking their site to see if I've won every month, anyway. 

Exactly what I do, which is why I started this thread, to let folks know that NS&I savings options is now an option outside of Premium Bonds.

Martin Lewis has a really good article on Premium Bonds. https://www.moneysavingexpert.com/savings/premium-bonds/

I didn't have any but have seen you guys talk about them before and I thought to myself, if jfkimberly likes the look of them, that's good enough for me so I bought some! I won £25 this month, only the second month I've been eligible so really happy about that! I feel I have you to thank jfkimberly!   

Martin Lewis has a really good article on Premium Bonds. https://www.moneysavingexpert.com/savings/premium-bonds/

I didn't have any but have seen you guys talk about them before and I thought to myself, if jfkimberly likes the look of them, that's good enough for me so I bought some! I won £25 this month, only the second month I've been eligible so really happy about that! I feel I have you to thank jfkimberly!   

Aww, yay!  I'm glad it's paid off for you so quickly!  With the amount I've invested, I'm likely to win within a year... my husband wins every month.

Ok, I am totally not following this.

You buy bonds, which is basically you invest some money that someone else uses.

Periodically there is some kind of a lottery where if your bond's number comes up, you win a prize. But you are by no means absolutely going to win.

When you cash-out more than you paid in, you owe (if you are a US citizen) taxes to the USA, right?

So....it's like a lottery that doesn't make you any income unless you win a "prize"?

Ok, I am totally not following this.

You buy bonds, which is basically you invest some money that someone else uses.

Periodically there is some kind of a lottery where if your bond's number comes up, you win a prize. But you are by no means absolutely going to win.

When you cash-out more than you paid in, you owe (if you are a US citizen) taxes to the USA, right?

So....it's like a lottery that doesn't make you any income unless you win a "prize"?

Martin Lewis explains it well here. https://www.moneysavingexpert.com/savings/premium-bonds/

It's like playing the lottery except you get all of your money back when you want it. 

The draws are monthly and any winnings are tax free in the UK but not from a US standpoint.

Martin Lewis explains it well here. https://www.moneysavingexpert.com/savings/premium-bonds/

It's like playing the lottery except you get all of your money back when you want it. 

The draws are monthly and any winnings are tax free in the UK but not from a US standpoint.

Exactly. The winnings are paid automatically  into our bank account, the bonds themselves never lose value and can be redeemed at any time.

I started this thread not to promote Premium Bonds but to point out that the other, standard, savings vehicles from NS&I are now available to USCs. When we first got back in 2016/17 they had some of the best rates out there but US citizens were not allowed to invest.

I had another £25 win this month,  £750 year to date.

Ah, that's interesting. My savings account is earning me diddly, so perhaps I can spare a bit for one of the NS&I then!

From a US tax perspective premium bonds are FBAR & 8938 reportable. Prizes are taxable.  From a UK tax perspective prizes are tax-free, but the capital forms part of an estate at death, so may still be charged to IHT.

Just catching up on my 2019 tax filing before the 15th October Deadline. Very quick question - which schedule and line should I report premium bond winnings on?

Just catching up on my 2019 tax filing before the 15th October Deadline. Very quick question - which schedule and line should I report premium bond winnings on?

I report mine as interest on Schedule B, which appears on the 1040 line 2b (taxable interest). Last year was a good year, $1,212 in premium bond winnings.

Thanks for the advice - yes I still consider Premium Bonds to be a good investment, especially if you hold a good chunk of them - a prize fund of 1% from December with instant access is still not to be sniffed at - the only drawback is potentially winning the big one and paying a large slice to Uncle Sam - chance would be a fine thing and one to be tackled if it ever happens!