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Tax benefits of onshore and offshore bonds driving increased uptake amongst advisory firms

24 October 2018

Adviser firms are set to write more bond business over the next 12 months with benefit such as top slicing relief increasing their popularity. 

Nearly three quarters (73%) of advisers said they were considering or planning to increase the amount of bonds they write for clients in the next year, with exactly a quarter (25%) stating they would definitely increase the amount they write, according to new research from Canada Life.

Richard Priestley, executive director of Canada Life UK, said: “Despite the complex, rapidly evolving landscape, the popularity of bonds with advisers shows no signs of slowing. It is unsurprising that more advisers are recognising the benefits of bonds, such as top slicing relief, compared to a year ago.

“However, with 2019 on the horizon, advisers who have yet to consider writing more bond business for their clients in the next 12 months would be wise to consider this option.”

According to Canada Life, the majority of advisers (55%) believe onshore bonds play an important role in the advice they give to clients, while three fifths (61%) say bonds are more useful than most advisers believe. The popularity of international bonds is also on the rise, inching up from 17% in 2017 to 18% in 2018.

Among those advisers in support of bonds, over two thirds (67%) cited tax deferral options as an advantage, up significantly from just under half (49%) last year. Meanwhile, over three in five advisers (62%) say top slicing relief is one of the main advantages of writing bonds, marking a substantial increase from the 48% reported in 2017.

Of those looking to write more bonds over the course of 2019, two in five (40%) plan to write a mixture of both onshore and offshore, while over two fifths (42%) intend to only write more onshore bonds, Canada Life said.

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