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. |
