Investment Bond

With our Investment Bond, your clients can allocate separate investment objectives and withdrawal strategies within different segments of their bond. For instance, 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 a 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.

Other tax advantages

• If your client's bond is set up as joint life or under trust, it lasts until the death of the last life assured. So it could outlast the lifespan of the original investor - allowing for truly long-term family tax planning.
• Your client can switch funds without becoming potentially liable for capital gains tax.
  

Inheritance tax and trusts

The Investment Bond allows your client to set up a gift trust, so they can limit their exposure to inheritance tax and pass on wealth tax efficiently. A gift trust is an outright gift with no access to either capital or growth. 

Managing the bond

It’s easier than ever to manage your clients’ investments:

• Automatically rebalance your clients' portfolios to adapt to changes in the markets*
• Automatically drip-feed money from one fund to another over an agreed time period, to keep your clients' investments at the risk level they want.
  
• You can choose how to charge your clients for your advice, from a full range of flexible options.

*Any switches/buys/sells will stop automatic rebalancing.

How many people can own an investment bond?

One person or two people can own jointly, or it can be held under Trust.

Can my client make additional investments?

Yes. Your client can top up at any time. They will need to put in at least £1,000.

What’s the allocation rate?

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.

How easy is it to take out money?

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.

What adviser charging options are available?

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.

Do you offer drip-feeding and portfolio rebalancing?

Yes, both of these features are offered.

Does the bond pay a loyalty bonus?

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.