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Savings and Investment - Investment Bonds


Investment Bonds - Savings and Investment

About Investment Bonds

Investment bonds are a lump sum life assurance policy, with minimal life cover. Your money is pooled with other investors and invested in a basket of shares or securities.

There are two types of investment bonds:

  • With Profits investment bonds, which grow through the addition of regular bonuses and usually receive a terminal bonus
  • Unit-linked investment bonds, which are directly linked to investment fund performance

One of the great features of investment bonds is that you are often able to withdraw 5% of capital each year free of basic rate income tax and capital gains tax. Some people use this as their income and because it is capital there is no basic rate Income Tax to pay. Withdrawing capital each year however means that your overall return could be reduced.

The taxation of investment bonds is very complicated. Non-taxpayers and basic rate taxpayers will incur no tax liability on encashment of their bond, but higher rate taxpayers may be liable to Income Tax.


List of Investment Bond Providers


OCIS provide general financial information, we urge you to consult an Independent Financial Adviser ( IFA )
before making any important decisions about your finances.