Onshore investment bonds typically carry a lower risk and contribute significantly to a well-rounded portfolio. Historically, numerous investors have opted for a 60% equities and 40% bonds split in their portfolios, as these two assets often (keep in mind, not always) exhibit contrasting performances under varying economic circumstances \u2013 a beneficial attribute during market volatility.
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Following the Capital Gains Tax (CGT) changes announced in last year’s November Autumn Statement, many investors are likely considering investment bonds a more attractive option. The Chancellor’s decision to reduce the CGT allowance to \u00a36,000 this year and to \u00a33,000 in April 2024 means investment bonds are more attractive to mass-affluent investors who previously held money in OEICs and unit trusts.<\/p>\n
Investment bonds offer several benefits:<\/strong><\/p>\n Onshore bonds are not liable to CGT. Onshore bonds are treated as having already paid 20% tax on any gains when calculating a chargeable gain. In reality, the tax deducted is likely to be less than this.<\/p>\n They can be ideal for Inheritance Tax (IHT) planning and are exempt from IHT after seven years if held in a trust.<\/p>\n Investors can withdraw up to 5% of their initial investment annually without triggering a chargeable event or any immediate tax liability.<\/p>\n Top slicing relief is available to reduce tax liability, which can eliminate or significantly reduce any tax liability when a chargeable event is incurred \u2013 helpful if investors are in the accumulation phase and are preparing for retirement (maybe a higher rate taxpayer while owning the bond, but a basic rate taxpayer when encashing).<\/p>\n There are options to assign a bond (for example, between husband and wife as a genuine gift). For tax purposes, the assignment will generally be treated as if the new owner had always owned it \u2013 if one is a basic rate taxpayer, they could have no tax to pay on encashment.<\/p>\n Have you exhausted your other tax allowances?<\/strong> Exploring why they are an attractive option to mass-affluent investors Onshore investment bonds typically carry a lower risk and contribute significantly to a well-rounded portfolio. Historically, numerous investors have opted for a 60% equities and 40% bonds split in their portfolios, as these two assets often (keep in mind, not always) exhibit contrasting performances under … Continue reading “Investment bonds”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-4344","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/reddotgroup.co.uk\/news\/index.php?rest_route=\/wp\/v2\/posts\/4344","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/reddotgroup.co.uk\/news\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/reddotgroup.co.uk\/news\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/reddotgroup.co.uk\/news\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/reddotgroup.co.uk\/news\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4344"}],"version-history":[{"count":0,"href":"https:\/\/reddotgroup.co.uk\/news\/index.php?rest_route=\/wp\/v2\/posts\/4344\/revisions"}],"wp:attachment":[{"href":"https:\/\/reddotgroup.co.uk\/news\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4344"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/reddotgroup.co.uk\/news\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4344"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/reddotgroup.co.uk\/news\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4344"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nChanges to CGT and the tax-free dividend allowances are also likely to appeal to investors looking to reduce IHT liabilities and those who have used their Individual Savings Account (ISA) allowances or received a large windfall payment.<\/p>\n","protected":false},"excerpt":{"rendered":"