Uncertainty surrounding the future of the bonds market - sparked by Chancellor Alistair Darling's plans for capital gains tax (CGT) - is misguided, providers say.
Zurich and AEGON say proposals to change CGT to a flat rate of 18% have been misunderstood, arguing for some investors bonds will remain the most attractive products in the market. One of the advantages of bonds over shares is that CGT does not apply to gilts and conventional bonds. Some economists are arguing by reducing the CGT rate the appeal of bonds is negated and could lead to a significant problem for the fixed income market. But Paul Wright, investment management director at Zurich, says this isn’t necessarily so. “The changes to capital gains tax announced in the pre-Budget...
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