At Picton Financial we offer investors the opportunity to participate in both the new issue and secondary bond markets.
Investment bonds are life insurance policies where you invest a lump sum in a variety of available funds. Some investment bonds run for a fixed term, others have no set investment term. When you cash investment bonds in, how much you get back depends on how well the investment has done.
Bonds can help diversify your investment portfolio. Bonds offer fixed interest payments at regular intervals and can act as a hedge against the relative volatility of stocks, real estate, or precious metals. Because they pay a regular, fixed amount of interest, bonds can also provide you with a steady stream of income.
All gains and income earned within an investment bond are taxed at 20% and paid directly out of the investment bond.
Withdrawals of up to 5% a year are allowed for up to 20 years without incurring an additional tax charge.
If you don’t use your 5% allowance in a given year, the allowance is carried over to the following year i.e. if you make no withdrawals in year one, you could draw up to 10% the following year without incurring a tax liability.
So if you’re a higher rate or additional rate taxpayer, paying 40% or 45% tax on income in the current tax year, an investment bond can minimise your income tax bill.
However, your tax bill does not disappear entirely. Instead, the tax is deferred and any additional tax due will be payable at the time you cash in the bond, or when it matures.
Some bonds give you tax breaks, allowing you to keep more of your money.
Please do not hesitate to contact us if you would like further information. Remember, we offer a free, no obligation initial consultation and will be happy to help if we can.