Investment Bond Advice

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A simple path to understanding investment bonds

The purpose of investment bonds is to provide individuals with a long-term investment vehicle that offers potential growth while incorporating elements of life insurance. People may take out investment bonds for a number of reasons, such as to potentially achieve long-term investment growth, enjoy tax advantages like tax deferral, mitigate inheritance tax, benefit from a diverse portfolio, or provide financial protection for beneficiaries.

At Lester Brunt, we have an in-depth understanding of how bonds can be used as part of a comprehensive financial strategy. We tailor our investment bond advice to your aims and circumstances, creating a custom strategy that helps you achieve your goals. Investment bonds may seem complicated at first, but our advisers are here to make the process easy to understand. Our goal is for you to feel confident and well informed in your financial decisions, whatever they may be.

How we work

Choose the right investment bonds for you

Investment bonds are life assurance plans issued by insurance companies. They can be a flexible and valuable component of any wealth management strategy. Although subject to income tax, investment bonds offer considerable flexibility. There are two distinct types of investment bonds: offshore and onshore bonds.

Offshore bonds

Offshore bonds are offered by international insurance companies based in tax-efficient jurisdictions. They allow UK residents to invest abroad while avoiding the 10% withholding tax. Offshore bonds provide potential growth, diversification, and estate planning benefits within a tax-efficient framework.

Onshore bonds

Onshore bonds in the UK are investment products offered by UK-based insurance companies. They provide a tax-efficient investment option for UK residents. Onshore investment bonds are taxed on their investment returns; these are handled by the insurance company ‘behind the scenes’ and a basic rate tax credit applies to any chargeable event gains.

Investment bond advice shaped around you

 

In an age where the online world is at our fingertips, why shouldn’t your wealth management be there as well? Our Online Services allow you to access all your wealth investments in one smart place. Whether you’re already registered, or just about to, here are some great features that can help you get the most from your online account.

Online registration:

Registering for Online Services with an activation code allows instant access. If you haven’t got a code, please contact your adviser. Registering online ensures all information is password protected.

Set your preferences:

Set your communication preferences to receive your digital reports and electronic correspondence.

Self-service:

Make online debit card payment for ISA and any JISA top ups with a debit card

linked to your account, on demand and at a time that suits you. Make payments to Unit Trusts, Retirement Accounts and new ISAs. (Speak to your adviser in order to get this process started) View the value of your investments in a range of currencies and see a breakdown of

this valuation. Instant notifications when a new document is available to view.

For every client opting for paperless correspondence, St. James’s Place will donate £5,to the St. James’s Place Charitable Foundation.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The favourable tax treatment of ISAs may not be maintained in the future and is subject to changes in legislation.

Investing in their future:

Less well-known is that children can also have a pension fund as soon as they are born – and setting one up can bring significant tax advantages. Even if your child is a non-taxpayer, they will still get basic-rate tax relief on contributions. That means a maximum of £2,880 a year is automatically grossed up to take account of tax at 25%, giving an annual investment of £3,600

What we offer

Why choose investment bonds?

Tax advantages

Investment bonds often provide tax advantages that make them attractive to certain investors. You can withdraw up to 5% of the original amount of each investment into the bond, every policy year, until 100% of the original investment has been withdrawn, without any immediate Income Tax liability (provided that your total withdrawals – including income paid and the cost of advice – does not exceed the 5% allowance).

If you do not withdraw the full 5% allowance in one year, the remainder can be carried forward and set off against a subsequent partial withdrawal. Withdrawals that exceed this 5% allowance may be subject to Income Tax. Bonds are normally free of Capital Gains Tax.

Please note that if the withdrawals taken exceed the growth of the Bond, the capital will be eroded.

Investment growth

Investment bonds aim to generate growth over the long term by investing the initial lump sum in a range of assets, such as stocks, bonds, or property. The objective is to increase the value of the investment over time, allowing individuals to potentially achieve capital appreciation and income.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

Estate planning

Investment bonds can be used as part of estate planning strategies. They may offer Inheritance Tax advantages and the life insurance component of investment bonds can also provide a predetermined payout to beneficiaries upon the death of the policyholder, offering financial protection and support.

Diversification

By investing in a range of assets, investment bonds provide diversification. This diversification helps spread the risk and reduces the exposure to a single investment or asset class. It can potentially enhance the stability and performance of the overall investment.

Flexibility

Investment bonds typically offer flexibility in terms of access to funds. Investors can often make partial withdrawals or fully surrender the bond, accessing their money when needed. However, it’s important to consider any penalties or charges associated with early withdrawals.

Financial protection

The life insurance component of investment bonds offers a degree of financial protection in the event of the policyholder’s death. This automatically included element of life cover is based on the value of your investment. The death benefit is 101% of the bond’s value on the day you die. If it’s a joint bond it pays out when the last life assured dies. This insurance feature can provide financial support to loved ones and help cover expenses or obligations.

Investment bond advice shaped around you

Gone are the days when only those few ‘in the know’ could benefit from investment bonds; at Lester Brunt, our goal is to make financial management accessible and easy to understand for all. Our advisers will take the time to get to know you as an individual, and explain all suitable investment options in a way that allows you to make clear, well-informed decisions.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested. Currency movements may also affect the value of investments.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.

High Risk Investments

VCT

Venture Capital Trusts (VCTs) enable our clients to indirectly invest in a range of small, higher-risk trading companies, whose shares and securities are not listed on a recognised stock exchange. By investing through VCTs, our clients can spread investment risk over a number of companies.

 

EIS

The Enterprise Investment Scheme (EIS) is a UK government scheme that started in 1994 and helps younger, higher-risk businesses raise finances by offering generous tax reliefs to investors.

Don’t invest unless you’re prepared to lose all the money you invest. Both the VCT and EIS are high-risk investments. You may not be able to access your money easily. The legislation and, as a result, the tax treatment will depend on individual circumstances, may change in the future and could apply retrospectively.

Take 2 minutes to learn more.

FAQs

What is the purpose of offshore investments (like offshore bonds)?
Investing offshore provides additional benefits beyond traditional investment approaches. In addition to potential tax advantages, you can also enjoy asset protection and enhanced privacy. These advantages can create opportunities for greater returns. However, it’s important to note that offshore investments may also expose you to increased risks.

Are offshore investments legal?
Yes – offshore investments are legal. Although offshore investing often gets a bad rap from the media covering stories about people who have used offshore banks to illegally dodge tax, there are plenty of ways to legally benefit from offshore investments. In fact, if you have a pension, you may even already be investing overseas.

Our advisers will be able to offer complete peace of mind and explain the investment process in detail.

 

 

For more details about services that we offer reach out to us on 01202 695801, or click the button below.

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