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MetLife rues lack of level playing field on bonds

Metlife Europe says advisers should not ignore the benefits of unit trusts for income investors and clients seeking to mitigate inheritance tax.

It says despite the introduction of the 18 per cent flat rate for capital gains, investments bonds still retain key advantages over unit trusts.

Head of product marketing Peter Carter says he is disappointed the level playing field on tax between investment bonds and unit trusts has disappeared, but says unit trusts have not been handed the advantage as advisers will have to consider more than tax.

He says: “It is disappointing that there will not be a level playing field for investment bonds against unit trusts because of the CGT changes.

“However the decision to choose an investment bond or a unit trust remains complex and the knee-jerk reaction that the CGT changes give an advantage to unit trusts is wrong. Tax is not the only reason why someone chooses a particular wrapper for their investment.

“It is clear that investment bonds will remain attractive products for basic rate taxpayers, people seeking income and clients seeking to mitigate IHT. There is a strong need for advice and IFAs are well-placed to provide support for clients.”

Some commentators have argued in the wake of the budget that unit trusts are more suitable for all investors and particularly higher rate taxpayers.

But MetLife says a crucial benefit of investment bonds includes the availability of guarantees in contrast with unit trusts which have suffered from stock market volatility.


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