Our Independent Financial Advisers can help you decide whether Investment Bonds are an appropriate way of investing your funds.
Investment Bonds:-
- Are sold by life insurance companies and allow you to invest in a variety of funds managed by their investment managers
- They are technically single premium life insurance policies and carry a small element of life cover
- Your money is allocated between units in funds of your choice and each fund holds a portfolio of investments
- The price of your units will rise or fall in line with the performance of the investment portfolios
- The typical minimum investment for Investment Bonds is £5,000
Investment Bonds offer flexibility if you want to invest a lump sum for the long term:-
- They are designed to produce long term capital growth, but can also be used to generate income for you
- They can also provide tax benefits if you are a higher rate taxpayer and want to draw an income of up to 5%
Tax and Investment Bonds:-
- You do not pay Capital Gains Tax on any gains
- You don't pay basic rate income tax on any income you receive
- Higher rate taxpayers are liable to income tax at a rate equal to the difference between the basic rate and the higher rates
- You are not liable for income tax until you cash in your bonds or withdraw more than 5% per annum of their original investment
- You can carry unused 5% allowances forward from year to year
- If you are normally a basic rate tax payer but cashing your Bonds in pushes you into the higher rate tax bracket, you can still take advantage of "Top-slicing relief" to compensate for this
Charges for Investment Bonds:-
- Charges vary and are not always easy to follow
- Sometimes there is an initial charge plus an annual management charge
- Some bonds have no initial charge, but a higher annual charge in the early years
- Many investment bonds carry substantial early withdrawal penalties if you cash in your bond within 5 years
- Some companies also apply “Market Value Adjuster” to reflect market volatility
Please contact us to discuss how our Financial Services Team might be able to help you with Investment Bonds.
It is important to remember with Investment Bonds:-
- The value of your investments can rise & fall
- You might not get back a significant amount of your investment
- Past performance may not be repeated
