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Chartered Financial Planners

Chartered Financial Planners - Independent

Tel: 01332 416585

Chartered Financial Planners

Chartered Financial Planners - Independent

Tel: 01332 416585

Why Use An Investment Bond

The principal attractions of using a bond as an investment vehicle are as follows:

  • Bonds are not deemed to be ‘income producing assets’; this negates the need for individuals or trustees to complete self-assessment tax returns.
  • Funds within the bond can be switched without the requirement for any tax reporting and without rise to Capital Gains Tax.
  • 5% can be withdrawn from the bond without immediate tax liability for 20 years cumulatively.
  • As well as the ability to draw funds from the bond within the relatively well known 5 per cent rule, there are a number of “exit strategies” that can be considered to minimise the tax on final encashment.  These include the use of “top-slicing” relief combined with encashment in a year of lower income and/or assignment to a lower or non-tax payer.
  • Bonds can be taken out with multiple lives, not true with ISAs or pensions.
  • Bonds can be placed in trust.
  • For higher and additional rate taxpayers, and especially where the underlying investments are expected to deliver a relatively high level of yield (interest or dividends), the tax deferring qualities of a UK bond will be particularly valuable.  This is especially so for larger investments over the longer term.

WE believe onshore investment bonds are a particularly useful tool to satisfy the needs of investors looking for:

  • growth on their investment over the medium to long term
  • a range of income options including fixed levels of withdrawals
  • pre/post retirement income provision with option to improve planning to minimise future tax liabilities and the flexibility to support changing needs
  • a suitable investment vehicle for estate planning
  • a range of funds available to help tailor a portfolio according to your attitude to risk and investment goals

However onshore bonds aren’t right for everyone, we believe they are not typically suitable for potential investors that:

  • are non-tax payers, unless other benefits such as estate planning or fixed income needs outweigh payment of the equivalent of basic rate tax within the bond
  • haven’t considered other investment types that may be more suitable to their needs, especially tax favoured products such as ISAs and pensions
  • aren’t willing to accept any risk to their investment
  • can’t commit to a medium to long term investment
  • are not UK resident.

What our customers say

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I run a successful company and turned to Pete for our pensions auto enrolment. This was completed on time and in budget. As a result he now manages my SIPP. He explained pensions in a simple way to staff and. We meet twice a year or as required to do my review.

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