Capital Investment Bonds
Description
Capital investment bonds are highly tax-efficient wrappers giving
you a wide choice of medium to long-term lump sum investments. They
offer a wide range of investment options and provide a flexible way
of profiting from professionally managed investments. (sentence
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Objective
The primary objective of capital investment bonds is to provide
investors with growth in value over the medium to long term.
Suitability
Capital investment bonds are an investment alternative for
investors seeking growth of capital for purposes such as retirement
planning.
Features
- Professionally managed funds: Your money participates in one or more of the investment funds run by a life assurance company. There it is managed by professional fund managers with the aim of growth in value.
- Diversity: You can, if you wish, choose unit-linked life assurance funds covering a wide range of assets including shares, gilts (government bonds), corporate bonds and commercial property. This well-diversified spread of investments evens out the risks involved.
- Returns: If you choose unit-linked funds, remember that returns fluctuate in line with the underlying fund value. The value of these funds can go down as well as up and you may get back more or less than you invested.
- Tax deferral: Capital investment bonds allow you to defer tax. Gains are deemed to have had basic rate tax deducted. Only higher rate taxpayers have further liability at the difference between the higher and basic rates of tax (currently 20%). No Capital Gains Tax (CGT) is payable.
Higher rate taxpayers may draw 5% of the capital per year with no immediate tax liability. However, they may be liable to a marginal tax on gains when they cash in the bond. People often avoid this, by allowing gains to accumulate until they become basic rate taxpayers after retirement.
Important Information: Tax laws and practice are subject to change. There may be reduction of the original capital if withdrawals exceed the amount of capital growth on the investment.
For more information, please contact your Edward Jones financial adviser.
