If you are considering NS&I Income Bonds for monthly income, the practical question is whether you can open one or add more money.
NS&I Income Bonds are closed to new savers and existing holders cannot add money, although they can keep receiving monthly interest and withdraw holdings.
Income bonds are closed, but existing accounts remain
NS&I Income Bonds are not available to new savers, and existing customers cannot add more money to them.
Existing holders can log in through NS&I online services, check monthly payments, change their nominated bank account and request a withdrawal. Interest is paid into the nominated bank account every month, and withdrawals usually arrive within 3 to 5 working days.
The old 6.2% rate is not a live quote
Income Bonds have full UK Government backing through NS&I. This differs from FSCS protection, which covers eligible bank and building-society deposits up to its stated limit. Government backing protects the money held, but it cannot stop inflation reducing what that money buys.
Income Bonds have a variable savings rate, so the percentage shown on older webpages, comparison tables or search results may not be the rate paid on an existing holding today. Check the rate displayed in your NS&I account and its effective date, then use that figure rather than a historic headline. The often-quoted 6.2% was not an Income Bonds rate: it related to a time-limited NS&I fixed-term bond issue in autumn 2023.
Income Bonds were paying 3.30% from 24 August 2023, illustrating why product names and dates matter. A rate change affects future monthly interest, while the capital itself remains government-backed savings.
Compare the term, access and tax before moving cash
Compare products by whether the rate can change, whether money is locked away, and whether interest is paid monthly, yearly or at the end of a term.
| Product | New money? | Rate and term | Access and interest | Tax wrapper |
|---|
| Income Bonds | No | Variable, no fixed term | Withdrawable; monthly interest | No |
| Guaranteed Income Bonds | Check current issue | Fixed rate, fixed term | Early exit terms apply; monthly interest | No |
| British Savings Bonds | Only when NS&I offers an issue | Fixed, often 2 to 3 years | Normally locked until maturity | No |
| NS&I Direct Saver | Yes, if on sale | Variable, no fixed term | Easy access; interest choice varies | No |
| Cash ISA | Yes, subject to rules | Variable or fixed | Depends on provider and ISA type | Yes |
Fixed income is not flexible income
A fixed-rate bond can provide certainty for a set term, yet early access may be restricted or penalised.
Direct saver may suit accessible cash
NS&I Direct Saver is the closer comparison for cash that must stay available, although its variable rate and interest-payment options may differ from Income Bonds.
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- Leaves a dated record of each savings rate checked
- Shows monthly income beside the annual gross return
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When deciding whether to retain Income Bonds, compare the net return rather than the headline rate alone. NS&I Direct Saver and other easy access savings accounts may offer a different variable savings rate and allow deposits, but bank deposits usually rely on FSCS protection rather than NS&I's direct government backing. A Cash ISA can be especially relevant where savings interest tax would reduce a taxable return, provided its rate and withdrawal rules suit you.
Compare monthly interest payments, access needs, the rate's effective date and whether inflation and savings are likely to erode the real value of cash.
Work out monthly interest after tax, not before
The monthly amount equals your balance multiplied by the annual gross rate, then divided by 12; what you keep can be lower because Income Bonds interest is taxable.
A simple monthly-interest calculator
Use this calculation with the rate currently shown for your account: annual gross interest = savings balance × annual rate. Then divide the annual result by 12 for an estimated monthly payment.
How £20,000 at 3.30% becomes a monthly payment
£20,000
balance
× 3.30%
annual rate
= £660
gross each year
÷ 12 = £55
gross each month
Tax depends on your unused Personal Savings Allowance and income-tax band.
For a quick estimate, multiply the balance by the annual rate and divide by 12, then consider how much of the annual interest falls outside your Personal Savings Allowance.
- At a 3.30% gross rate, £5,000 produces about £165 a year, or £13.75 a month
- £20,000 produces £660 a year, or £55 a month
- and £50,000 produces £1,650 a year, or £137.50 a month
If a basic-rate taxpayer has already used their £1,000 allowance elsewhere, the £1,650 example could leave £1,320 after 20% savings interest tax, equal to about £110 a month. These are estimates: the taxable amount depends on total savings interest, tax band and the rate actually paid.
Avoid four costly assumptions about these bonds
Government backing protects capital but does not remove tax, access needs, inflation risk or the possibility that another account offers a better rate.
Check these details before acting
Check whether you need monthly income, access within days, or a fixed return for a known date; Premium Bonds pay no regular interest and offer uncertain prize-draw returns.
This comparison is less useful if your main aim is long-term growth through investment, if you need a current account for daily payments, or if you have costly debt. It also does not replace personal financial advice: your emergency fund, time horizon, tax band and ability to accept a changing rate all matter.
Frequently asked questions
Are NS&I income bonds still available?
No. As at 11 August 2026, Income Bonds are closed to new applications and new deposits, but existing holders can normally manage and withdraw their money.
Is NS&I income bonds interest tax-free?
No. Interest is taxable savings income unless your unused Personal Savings Allowance covers it; a basic-rate taxpayer normally has £1,000, while a higher-rate taxpayer normally has £500.
How quickly can I withdraw income bonds?
Existing holders can normally cash in money to their nominated bank account within 3 to 5 working days. A bank-detail change or security check can extend that time.
Is the NS&I 6.2% rate still paid?
No current rate should be assumed from the historic 6.2% figure, which related to August 2023. Check NS&I for the rate effective for your particular existing account.
Choose by access, tax and rate date
Keep an existing Income Bonds account only if its current monthly income, access and taxable return still suit your needs. For new money, compare an available Cash ISA, Direct Saver and fixed-rate bond using the net amount you keep, the date you may need the cash, and the rate's effective date.
Further reading
If you want to learn more about this topic, these sources may interest you:
