Healthplan Spain


Premium Bond Holders In Spain Warned They Must Have A UK Bank Account Spain News

British residents in Spain have been warned that they may have to cash in their Premium Bonds if they no longer have a UK bank account.

The news, which has been shared across social media platforms such as Facebook, came to light after bond holders who live in Spain received a letter from the state-owned UK savings bank NS&I (National Savings and Investments).

The letter stated that if you don't hold a UK bank account, you can't claim any winnings.

"As you live in one of those countries we realise that this could affect your ability to continue holding your NS@I Premium Bonds and Income Bonds account. This is because you need to have a UK bank or building society account to continue to operate with NS&I."

The letter goes on to say: "if you don't have access to another UK account in your name, you will need to close your NS&I account."

The NS&I urges anyone who doesn’t have a UK bank account, but still holds Premium Bonds, to contact them on 44 1253 832007, saying that they appreciate “this might be worrying news for you…

Premium Bonds are a form of savings for many and one person can invest as little as £25 up to £50,000 (29 euros to 58,000 euros). Every pound invested is given a unique number and each month numbers are drawn and tax-free prizes are distributed. Prizes range from £25 up to £1 million.

The news will come as a major blow to many, as recently the NS&I increased its Premium Bond prize fund rate from 1% to 1.4% from June 1. This increased the odds of a win from 34,500 to one to 24,500 to one and added more than one million prizes to the June draw.

There will still be two monthly winners of the top cash prize of £1 million but the number of £100,000 prizes will rise from six to 10 and the number of £50,000 prizes will increase from 11 to 19.

NS&I said that the reason for warning its customers living overseas is due to the fact that some UK banks have been closing the accounts of their customers based in the EU. This is because these lenders no longer have the licence necessary to maintain them after the UK left the European Union.

Lloyds Bank, Barclays and Coutts are among those lenders who have been closing accounts of their UK customers who are now resident in EU countries.

On the other hand banks such as HSBC, NatWest and Santander are currently taking no such action for their clients who fall into this category.

The letter sent by NS&I stated that since the Brexit transition, “some banks and building societies in the UK have told their customers living in certain EU countries that they will no longer be permitted to hold their UK-based accounts.

As you live in one of those countries, we realise that this could affect your ability to continue holding your NS&I Premium Bonds and Income Bonds account(s). This is because you need to have a UK bank or building society account to continue to operate an account with NS&I,” it continued.

Speaking to Spain-based newspaper The Local, NS&I confirmed that “it would be impractical and against NS&I’s Customer Agreement (terms and conditions) for (these customers) to continue holding NS&I products. NS&I’s Customer Agreement requires customers to keep a UK bank or building society account open in order to operate its accounts.

However, according to NS&I, all is not lost, as they confirmed that “any UK bank or building society account that can receive BACS payments” will be accepted for holders of its products living in the EU.

London-based financial technology company Wise (formerly TransferWise) offers this type of account.

Telling The Local “British nationals living in the EU can open a Wise Account to get their own personal UK account details, which supports payments made by BACS transfer.

This means UK citizens living in the EU can get a personal UK account number with the Wise Account.

In practice, this means that anyone who holds any NS&I products and is facing having their UK account closed by their lender because of Brexit, can open a substitute account with Wise or a similar firm that supports BACS payments and accepts UK nationals as customers if they reside in an EU country.

It is good to be mindful that while winnings from Premium Bonds are tax-free in the UK, the same cannot be said if you are living in Spain.

Spain-based financial adviser Chris Burke also spoke to The Local and explained that the rules of each individual country determine whether tax is due on prizes from the product.

He explained that “In Spain, each year you must declare any monies received from these whether you access this or not, and pay the tax liable.

This would be savings/capital gains tax starting from 19 per cent [for amounts up to €6,000] and rising up to 26 per cent (for anything over €200,001).

So the warning is…while you might take home a tidy sum of £1 million in the UK, if your Premium Bonds number comes up, in Spain, you will have to share it with the Tax Agency.

NS&I also offers a wide range of other investment products, including Direct ISAs, which are a tax-free savings account and Income Bonds, which pay regular interest to holders

According to NS&I, all of their products are affected in the same way.