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There are lots of reasons why clients might want to invest: from retirement and estate planning, to school fees for their grandchildren. With our 2016 5 Star Defaqto rated* Onshore Investment Bond, they can invest for the medium (at least 5 years) to long term (over 10 years) in a tax-efficient way, with the flexibility to use their investment for different purposes.
With our Investment Bond, your client has the flexibility to split their investments up into individual policies or segments. A segment for their grandchildren might be a relatively long-term investment, and could feature more adventurous funds. A segment to pay for a holiday would be shorter-term investment and might include lower-risk holdings.
Segments can even be placed in trust or transferred to beneficiaries, without the need to cash in the bond and pay tax on the money.
Your client can withdraw up to 5% of the initial amount invested (including any additional investment) in each individual policy year for a period of 20 years, through regular or one-off withdrawals, without any immediate tax liability. And, if they don’t use the full 5% allowance, then this can be carried over to the following year – so they don’t miss out.
Your client won’t even have to pay income tax at the time because tax is deferred until the bond is cashed in. That’s provided they don’t take more than 5% a year, whether as withdrawals or paying your charges.
This 5% allowance is cumulative, which means, for example, your client can withdraw 4% per year for 25 years, or if your client does not use their 5% withdrawal in one year, they can withdraw up to 10% in the following year with no immediate tax liability, regardless of their tax position.
If they do go over the 5% annual allowance (this allowance post RDR includes any adviser charges, initial and ongoing, along with any withdrawals taken by the client - regular or one-off), then this amount may be taxed as income during that tax year.
If your client sets up a trust, they could also limit their exposure to inheritance tax. There are a range of trusts (each trust has two versions – bare and discretionary) and options to choose from depending on how your client would like to access their investment. They can choose:
To help you and your client decide on the best option, you can:
It’s easier than ever to manage your clients’ investments:
Whenever you want, find the information you need to service and act on investment changes for your clients. You can:
Existing investment bond holders who are UK residents aged 18 or over.
One person or two people can own jointly, or it can be held under Trust.
Yes. Your client can top up at any time. They will need to put in at least £1,000.
100% with no hidden fees. This goes down to 98% where the only or youngest person included as a life assured on the bond is aged 80 or over.
Up to four people. Those people must be at least two years old and one or more must be under 85 when your client buys the bond. We will pay 101% of the cash value of the bond when the last person’s life ends.
A bond can be split into 99 segments. Your client can invest each segment in different funds and assets, but they must put at least £500 into each segment.
Your client can make one-off or regular withdrawals, and they can cash in some or all of their bond at any time. Please bear in mind that these actions could have tax implications. See Key Features of the Investment Bond to find out more.
A full range is available, allowing payment to be made directly from the bond. Initial and Ongoing adviser charges are available on both a "£" or "%" basis with the exceptions being Discounted Gift Trusts - they can only be on a "£" basis.
You can choose from the discounted gift trust, loan trust, and gift trust. We also offer Bare and Discretionary versions for each of these trusts.
Yes, both of these features are offered.
Yes. When your client has held a bond for 10 years, we pay 0.5% of the bond’s value as a loyalty bonus. This doesn’t apply to additional investments made after eight years.
Tax legislation could change in the future. The information here is based on our interpretation of current law and HMRC rules. The value of any tax benefits will depend on your client's personal circumstances.
The value of your clients' investments can go down as well as up and is not guaranteed. So they could get back less than they put in.
The Investment Bond is a medium (at least 5 years) to long term (over 10 years) investment. There is no fixed term or charge when your client cashes it in. However, we may introduce these or other charges in the future. Remember that withdrawals could have tax implications.
We reserve the right to refuse or delay payments and fund switches in certain situations. Please see Policy Provisions section 2.3.6 for more details.
* The Investment Bond achieved a 5 Star Defaqto rating in 2016 in the Onshore Bonds category. Please remember that past performance is not a guide to future performance.