Investment Options

An Onshore Bond and an ISA are simply wrappers, which determine the tax position of what is held within them. 

An Onshore Bond is a wrapper where the money is invested in a range of holdings as per the Unit Trust and OEIC Structure. Often within Onshore Bonds, insurance funds can be held, such as life and managed funds etc., which are not held within Unit Trusts. It is unclear, really of the true benefit and value of life managed funds, so we don’t consider this to be a benefit.

One benefit considered by many financial advisers is the accessibility of a with-profit fund within an Onshore Bond. Currently under review, it is unclear what their true value is as they are a highly opaque structure and undoubtedly they are impossible to understand in that companies are not open with the breakdown of how they are invested, the returns that are achieved, and the true charges applied to them.

Currently they are under review in order to make them more transparent and consumer-friendly. The fact remains, however, that an Onshore Bond guarantees that tax is taken from the fund from the outset of the holding. This therefore makes them less than tax-advantageous. Furthermore, on total encashment post-age 65, and age 75, the gain on the investment is added to your income for the year and this can abate any age allowance. On total encashment, a calculation is done to ascertain whether higher-rate tax could also be payable, making them as an investment, for us, less than attractive. 

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