Onshore investment bonds are becoming increasingly popular among advisers as they seek to navigate investment tax rises, says Chesnara Life UK.
The firm’s Onshore Bond Adviser Sentiment Survey found more than two out of five (43%) advisers say they are increasingly using onshore investment bonds with clients in response to tax rises on investments in general.
Cuts to the capital gains tax allowance and the freezing of that exemption until April 2031 specifically have had an impact on the use of onshore investment bonds for more than a third (36%) of advisers, while a similar number (35%) say inheritance tax and estate planning is a major influence.
The survey, which explores the use of onshore investment bonds by advisers as well as their views on key market issues, found 32% of advisers are using onshore bonds to help clients enhance the tax efficiency of their financial planning.
One in three (31%) say onshore bonds are playing a bigger role with clients as part of intergenerational planning, while 30% point to the impending inclusion of unused pensions in estates from April next year.
Mark Lambert, head of onshore bond distribution at Chesnara Life UK, said: “The tax treatment of onshore investment bonds has remained the same while dividends and CGT allowances have been cut. We also have the change to the IHT status of unused DC pension funds rapidly approaching causing further concern to clients.
“That stability surrounding the onshore investment bond has further enhanced the appeal of the product as a key part of tax efficient financial planning making them relevant to a wider number of advisers clients now and in the future.”
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