INVESTMENT BONDS

Investment bonds are unitised investments that can be invested in a wide range of funds. In addition to their own in-house funds, many providers offer a choice of funds from other investment companies within their wrapper. These funds will reflect fluctuations within the market and their values rise and fall. Investment in a With Profits fund will be affected less on a daily basis by market movements due to the smoothing effect. Recommendations of the most suitable funds for our clients are

Investment bonds are treated as if basic-rate tax has already been deducted. For this reason they are unsuitable for non-taxpayers or 10 per cent tax-payers, since the tax cannot be reclaimed. Basic-rate taxpayers have no more tax to pay, unless gains push them into the higher rate band in the year they cash the bond in.

Investors may draw out up to 5 per cent each year, for up to 20 years, with any potential tax liability deferred until encashment.  If you are a higher rate tax payer when the bond is encashed, there could be a further liability to income tax. There is no CGT liability on an insurance bond

Bonds such as these are a very useful vehicle for Inheritance Tax planning when written in trust. Please contact us for further details and recommendations.

ISAs

We regularly review our recommendations for ISAs and send out a newsletter each year with a choice of funds for your ISA allowance.
By taking a maxi ISA with only a stocks and shares component, £7,000 (£7,200 from 6 April 2008) can be invested in stocks and shares each tax year up to 2009/10 (with the Government announcing in November 2006 that it intends to continue to run ISAs as an open-ended product beyond 2010, with investment limits continuing.
If a mini ISA is taken then the maximum investment in stocks and shares for 1999/2000 to 2004/05 was £3,000. From 2005/06 it rose to £4,000.

Other Investments

For details on Unit Trusts, Investment Trusts, OEICs, Child Trust Funds or any other investments please contact us