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Bonds still have a role, says Jelley

Skandia says investment bonds still have a place despite the capital gains tax changes made in the pre-Budget report.

Head of tax and financial planning Colin Jelley says a simpler CGT regime is a great opportunity for long-term investors. Some people will be better off investing in unit trusts or Oeics if the changes are enacted but predictions that the bond market is dead are misguided and over-simplified, he believes.

Skandia says simplifying the tax regime ought to encourage long-term savings, which is good news for investors and product providers.

It says decisions on when to sell assets will be less constrained by the removal of taper relief and believes that the provision of financial advice focuses on needs beyond just price or tax.

Jelley says when stakeholder pensions were first developed, many said that they would mean the end of non-stakeholder pension products because price would become the key driver of product selection but experience has proven this not to be the case.

He says that the headline tax rate is only part of the investment equation, with other elements to be considered, such as rates, timing of tax charges including deferral, relief, allowances and exemptions plus the tax status of the individual investor on encashment.

Jelley says: “Whether or not the proposals are implemented, the need for advice has never been so clear for tax and investment. Clients need specific, individual advice on where best to invest their money taking into account all their circumstances, including tax.

“For some investors, the case for mutual funds could strengthen and become much clearer and fund platforms would have a key role to play in this sector of the market.

“For others, bonds will continue to be an appropriate way of managing their investment portfolio.”


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