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Investment Bonds
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Investment bonds are offered by insurance companies and allow investors to invest in a variety of different funds. Investment bonds are generally a form of collective investment allowing the investor access to a professional fund manager and a reduced risk through a wide spread of individual holdings.
Insurance companies offer a variety of funds investing in major and more specialist markets. In more recent years we have seen the introduction of with-profit investment bonds and distribution bonds. These two types of bonds have proved extremely popular with investors as they provide a good balance between investment risk and reward.
In addition there are a number of more specialist funds allowing the investor access to a wide variety of markets and the necessary level of expertise to invest in them.
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Tax Breaks
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Investment bonds can also provide useful tax breaks to higher rate tax-payers and people over 65 who are eligible for the additional age allowance. Basically you can withdraw 5% of the original investment each year and defer any liability to higher rate tax. Also any withdrawals up to 5% per annum are not treated as income and would not effect your age allowance.
Basic rate tax-payers would not be liable to any tax on the proceeds of the bond, provide that the withdrawal does not push them into the higher rate tax band.
Investment bonds can be a very useful tool for tax planning purposes.
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UK Non Status Mortgages | Financial Services | Links
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