Rachael Griffin, head of technical marketing at Skandia, explores the many reasons why investment bonds remain powerful tax planning tools.
With the recent alignment of onshore and offshore bonds in relation to time apportionment relief, it is a timely opportunity to revisit the tax benefits of an investment bond. Tax-deferred withdrawals It is possible to take yearly withdrawals of 5% of the initial premium (and any additional premiums from the year in which they are added) without an immediate UK tax charge. Furthermore, the 5% is cumulative if not used: so, where no withdrawals are made in year one, 10% can be withdrawn in year two and so on. The allowance continues until all of the original investment has been withd...
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