Investment Bonds
Find out more about investment bonds…
Investment bonds are a lump sum investment available mainly through life assurance companies. They enable you to gain access to an extensive range of investment funds.
Investment bonds offer significant flexibility as there is no fixed term and additional capital can usually be invested at any time.
Investment bonds have a number of advantages and can be particularly useful to those who are currently higher rate taxpayers but are likely to be basic rate taxpayers in the future, for example, after retirement.
A further benefit is that investment bonds enable you to take regular withdrawals of up to 5% per annum of the amount invested with no further liability to basic rate tax and in many instances it is possible to withdraw more than this.
Investment bonds are deemed by HM Revenue and Customs to be “non-income” producing investments and as such, provided that withdrawals are retained below the 5% per annum limit, they can make extremely useful investments for trusts and trustees.
Investment bonds can also be an important tool when carrying out inheritance tax planning. For example, they can be gifted into a suitable trust arrangement and, as a “potentially exempt transfer”, provided you survive for seven years from the date of the gift, will fall outside of your estate for inheritance tax purposes. There are, of course, other options available to investors undertaking this area of planning.
One issue that should be borne in mind when investing in investment bonds, however, is that the withdrawals received could affect your entitlement to the “age related allowance” for income tax purposes if you are age 65 and over. As with all investments of this type, the value of your investment is not guaranteed and may go down as well as up. However, by consulting a suitably qualified adviser, you will be advised of any potential risks, as well as the advantages of investing in investment bonds.
Speak to an advisor today about your investment options:
Please remember that capital value of an investment bond or the income provided by it is not guaranteed and could fall and rise. You may not get back all of the capital invested, especially if encashed at a time of adverse investment conditions.