We’re guaranteed winners with our syndicate in Premium Bonds

Bond fan: Lorraine Barton

Millions of Premium Bond holders live in hope of winning a top prize, but just a handful ever will. Of the 22 million holders in the UK, just two win a £1 million prize every month.

But a number of hopeful winners have found a way to increase their chances. The only catch? They’ll have to share their prize if they win.

Syndicates are common among people playing the National Lottery, where friends, family members or colleagues join together to increase their chance of winning a prize. But a small number of syndicates are opting to buy Premium Bonds instead of National Lottery tickets.

Each member of the group pays the same amount into a pot every month and the shared money is used to buy Premium Bonds. If any of the bonds win, the prize money is distributed equally among members of the group – or used to buy more bonds.

The top Premium Bond prize is £1 million – just a fraction of the top prize available in a National Lottery draw. But, Premium Bonds have other advantages. For a start, the chance of winning is much higher – one in five million versus around one in 15.3 million for the lottery. Secondly, unlike with National Lottery syndicates, Premium Bond holders build up a nice pot of savings that can be cashed in whenever the group decides.

However, Premium Bond syndicates need to be treated with caution as they are not recognised by National Savings & Investments (NS&I), which operates Premium Bonds.

NS&I says a bond may not be purchased or held by more than one person or by a body of persons, whether incorporated or not. A bond cannot be bought or held by someone on behalf of another, unless you are buying for a child or someone who lacks capacity to make their own financial decisions.

This means a high level of trust is required because if the person managing the syndicate does not play fair, the others will not get their share of the winnings. Bonds can only be held in the name of one person, and it is they who will receive any winnings. You must be able to trust that they will not disappear with your contributions – or winnings.

There are also potential inheritance tax complications for syndicates. Take, for example, a syndicate of ten people who win the £1 million prize. The winning account holder would – hopefully – give each individual £100,000.

But, because Premium Bond syndicates are not formally recognised, the £100,000 payments would be considered as gifts for inheritance tax purposes. Gifts are free from inheritance tax after seven years. But, if the account holder dies within seven years and leaves an estate worth more than their inheritance tax allowance of £325,000, there may be a tax bill to pay on those £100,000 gifts. Finally, there is no guarantee you will win and, on average, you are likely to make a better return in a top-paying savings account.

All this needs to be considered before going ahead with a syndicate. Nonetheless, it can work out well in some cases. In 2007, a group of 20 ambulance workers in Cwmbwrla, Swansea, won the top £1 million prize after they invested winnings from their lottery syndicate into Premium Bonds – each getting £50,000.

So how do Premium Bond syndicates work in practice? Victoria Gill, 46, from Darlington, County Durham, has managed a Premium Bond syndicate since 2006. The group used to be colleagues at Middlesbrough Council, working in the department for welfare rights and financial assessments.

There are five men and five women in the syndicate, aged between 40 and 60. Some now have new jobs or have retired, but remain part of the group. The ten members each pay in £25 a month, an amount that has not changed since 2006. The winnings are reinvested to buy more bonds and there is now more than £48,000 in the pot. Over the past six months, the syndicate has won a total of around £1,500.

An individual can only hold a maximum of £50,000 of Premium Bonds, and all of the bonds are held in Victoria’s name. So, when the syndicate gets close to the £50,000 maximum, she withdraws £10,000 and gives each person £1,000. But the plan is to continue paying in £25 a month each. 

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‘We used to have a National Lottery syndicate but we barely won anything after a year,’ says Victoria, who is now managing director at social media agency tgi Media. ‘Someone suggested starting a Premium Bond syndicate instead. We feel our chances of winning are better by clubbing together. You don’t tend to win much on the Premium Bonds unless you have a lot of money invested.’

Everyone has a standing order paid into a dedicated bank account set up and overseen by Victoria. All members know the holder details of the bonds so they can check the app online each month to see if they’ve won.

Victoria also gets a paper statement from NS&I each month, detailing how much is in the account and any wins that month. She takes a photo of this and emails it to all the syndicate members.

Victoria has changed her will so that if anything happens, the money will get distributed to the members. ‘There have not been any issues,’ she adds. ‘Premium Bonds suit us all. We’re not losing any money and we’ve definitely noticed our prizes have increased in the past year with rising interest rates.

‘If someone wants to leave the syndicate, they’ll get 10 per cent of the overall pot. But no one’s expressed any desire to leave yet and everyone’s happy with how things are.’

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Lorraine Barton, 62, started a syndicate in 1989 with six friends each paying in £10 a month.

‘It was a good way of saving,’ says Lorraine, a former Post Office worker from Norwich who is now retired. ‘We used to have meals out and get-togethers to plan what we would do when we won the million.’

The syndicate stopped paying in in 2002 because two members left, but there is still £6,800 in the pot, which occasionally wins prizes. Over the years it has won around £4,000.

Lorraine started another syndicate soon after, again with six members. They paid in until 2015, and now have £9,600 in the pot. It has won £800 over the years.

Lorraine says there is a lot of trust involved, but that everyone can check the prize app each month to see if the holder number has won. ‘Sometimes we go out for a meal or coffee and cake with the winnings or sometimes we just divide it,’ she says. ‘I keep a record of what each person wins and over the years it’s evened out.

‘I’m a big fan of Premium Bonds. We thought we’d just increase our odds by putting a little in and letting it build up between us.’

Jack Wilson*, 72, from Edinburgh, runs a syndicate with his wife, sister and niece. They all hold £50,000 worth of Premium Bonds in their own names, with the collective winnings split equally each month between all four. The biggest single win in the five years the syndicate has been going is £500, won twice through Jack’s sister’s account. Because they all hold the maximum amount of bonds, any winnings are withdrawn each month rather than reinvested. Total prizes currently average around £400 each month.

‘I send my sister a text on the morning the prizes are revealed and say you owe me this much or I owe you this much. It gives us more chances to win the £1million.

‘Singularly, we’d only have one chance. Because we’re a close family, we feel like we’re in it together. I can’t say I do anything exciting with my winnings though. Mostly it just goes on bills.’

*Name changed.

This post first appeared on Dailymail.co.uk