The advantages of Investment Bonds:
- Inheritance Tax mitigation if gifted into trust or used within a packaged IHT product such as a loan trust or discounted gift trust
- Can be used with Trust investment planning
- Long term care fees savings due to exclusion from local authority financial assessment apart from any withdrawals taken.
- Tax deferment especially for offshore bonds
- Can be used for any Income planning
- School fees and further education planning
- British expatriate investment due to 100% tax exemption for periods of non-residence known as time apportionment relief
The disadvantages of Investment Bonds:
- Tax inefficient as capital gains and income are subject to taxation unlike pensions and ISAs
- Charges are relatively high especially on offshore bonds
- Can be very Complex to set up
- Income Tax on surrender, part surrender or death cannot usually be avoided
- Frequent poor service and administration by insurance companies
