This unit-linked offshore bond has a £50,0000 minimum investment and is designed to be flexible in terms of its investment choice, charges and IFA commission structure.
Investors can choose from the Pinnacle range of 119 unit-linked funds from 25 fund management groups and their IFAs can create their own range of distributor influenced funds though the Zest Solutions option. These funds are established on a bespoke basis to meet the needs and risk profiles of an adviser’s client base.
Investors also have an open architecture option known as customised selection, which provides access to unit trusts, Oeics, investment trusts and sterling cash deposits that the FSA allows within its permitted linking rules. Unregulated funds and funds investing substantially in UK property cannot be held. A discretionary investment management option is also available for investors who choose customized selection.
Investments in the bond will grow free from income and capital gains tax and fund switches will not trigger a capital gains tax liability. The bond allows investors to defer tax on any gains they make, which gives them control over when they pay their tax. For example, a higher rate taxpayer may defer paying tax until they pay a lower rate of income tax.
A range of trusts such as discretionary gift trust, discretionary discounted gift trust and Isle of Man probate trust, is available to help investors with IHT planning.
Investors can make cash withdrawals on a regular basis or a lump sum, up to 7.5 per cent of the value of the initial investment each year. Regular withdrawals may be monthly, quarterly, half-yearly or yearly and may be a fixed amount or a percentage of investments paid into the bond.
Withdrawals above 5 per cent a year may give rise to an income tax charge but a 5 per cent a year allowance is available for the first 20 years, which is cumulative. This means that if investors do not use the 5 per cent allowance in year one, 10 per cent can be taken in the second year and so on. Any unused allowance can be carried forward beyond year 20.
IFAs and their clients may welcome Merchant Investors’ investment choice, flexibility and commitment to a good administrative service, but costs may be an issue where the customised selection option is chosen.