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AWD urges adviser review of insurance bonds for IHT planning

Advisers must reassess the benefits of using insurance bonds for IHT planning, says AWD Chase de Vere.

According to the IFA firm, the balance between simplicity and tax must now be reassessed, particularly for larger trusts. It says the tax savings may be outweighed by support costs for smaller trusts if professional support is required for the trustees.

Capital gains tax rules have dampened the appeal of bonds as unless the underlying assets are tailored to produce income on a tax basis only an Oeic investment would be more tax efficient, using the annual CGT allowance.

However, in IHT planning bonds have continued to be recommended despite CGT changes because IHT solutions worked best with non-income producing assets with nothing to pay to income beneficiaries, no tax returns and simple administration.

The firm says: “If advisers can establish a clear exit strategy, where on chargeable event gains can be made without reference to a settlor with income taxed at either a higher rate, 40 per cent to 50 per cent then bonds continue to have a place, if not, a new strategy is advisable.”


Ethical prospects look good

Worldwide IFA Nick McBreen says investors do not have to sacrifice returns to invest in ethical funds as many have held up well in the downturn.


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