sm124 - Flipbook - Page 3
Bonds
Evolution of bonds
Increasing awareness of intergenerational wealth transfer
signi昀椀cant proportion of people
A
tax-deferred withdrawal allowance when
planning tools, they provide a transparent way
(47%) plan to pass on their wealth to
taking funds for expenses, while avoiding the
to manage tax and inheritance matters. This
future generations, with over a third
complications linked to income-producing
simplicity not only makes bonds accessible to
(38%) intending to transfer assets
assets.
investors but also practical for trustees handling
report[1]. However, many are unaware of how to
policies enable trustees to allocate speci昀椀c
do this in a tax-e昀케cient way.
portions to bene昀椀ciaries later. This 昀氀exibility not
provide. With the ability to transfer ownership,
directly to their children, according to a new
The increasing awareness of intergenerational
Furthermore, bonds structured as clustered
long-term wealth.
Another reason is the 昀氀exibility that bonds
only diminishes future tax exposure but also
manage withdrawals and adapt to changing
wealth transfer emphasises signi昀椀cant changes
ensures bene昀椀ciaries receive 昀椀nancial support
circumstances, bonds can accommodate a wide
to Inheritance Tax (IHT) announced in the 2024
at the appropriate time, aligning with the original
range of estate planning scenarios. Ultimately,
Autumn Budget. Notable examples include the
trust objectives.
this 昀氀exibility ensures they remain a relevant and
new IHT rules applying to de昀椀ned contribution
powerful tool for passing on wealth.
pensions from April 2027 and the introduction of
LONG-TERM FINANCIAL
caps on business and agricultural reliefs. These
PLANNING OBJECTIVES
TAKE ACTION TO SECURE
changes have prompted many individuals to
However, despite these advantages, research
YOUR FINANCIAL LEGACY
reassess their estates.
indicates that more than two-thirds (67%) of
Bonds remain a valuable and often overlooked
The report’s 昀椀ndings reveal that over a
people are unaware of how bonds can assist with
resource for those seeking to grow their wealth
third (36%) of people are worried about their
inheritance planning or lower tax burdens. This
while reducing Inheritance Tax. By combining tax
昀椀nancial future. With tax thresholds frozen and
gap in understanding underscores the crucial
e昀케ciency with 昀氀exibility, they provide a practical
the potential for further increases, demand
role that professional 昀椀nancial advice plays in
solution to meet the increasing demand for
for professional 昀椀nancial advice is increasing.
this area.
intergenerational wealth transfer. t
People are increasingly seeking to understand
As awareness increases, more people are
the implications of IHT and ways to ensure their
aiming to equip themselves with the tools
wealth is passed on e昀케ciently.
needed to leave a lasting legacy. Bonds, with
their distinctive features, provide an attractive
BONDS OFFER EFFICIENT
option for those seeking to combine investment
ESTATE PLANNING TOOLS
growth with long-term 昀椀nancial planning goals.
One solution gaining popularity is the use of
Want to discuss securing
a tax-efficient future for
generations to come?
If you’re considering your own inheritance
or tax planning, don’t wait. Speak with us to
onshore bonds. O昀昀ering a unique blend of
EDUCATION AND PROFESSIONAL
昀氀exibility and tax e昀케ciency, these investment
ADVICE ARE ESSENTIAL
昀椀nd out how bonds, alongside other tools,
tools enable savings to grow while helping
Given the complexities surrounding estate
could help you achieve your long-term
to minimise future IHT liabilities. When
planning and the legislative changes to IHT,
incorporated into a well-designed estate
it has become essential to seek professional
can provide a more secure and tax-e昀케cient
planning strategy, bonds not only reduce tax
advice. We can help individuals and families
future for future generations.
exposure but also simplify the transfer of wealth
make well-informed decisions by guiding them
across generations.
through the intricate landscape of tax-e昀케cient
Onshore bonds are especially bene昀椀cial
because they can be transferred to family
investment options.
昀椀nancial goals. Proactive planning today
Source data:
Onshore bonds, in particular, can serve as a
[1] Survey of 4,000 nationally representative
members without generating a chargeable gain.
valuable tool for individuals seeking to achieve
UK adults conducted for LV= by Opinium in
The recipient is regarded as having held the bond
capital growth while reducing tax exposure. By
March 2025.
since the start. This enables them to make the
incorporating bonds into a broader 昀椀nancial
most of full top-slicing relief and any unused 5%
strategy, clients position themselves to bene昀椀t
tax-deferred allowances in future withdrawals.
future generations while remaining compliant with
changing tax laws.
This article does not constitute tax, legal or 昀椀nancial advice
and should not be relied upon as such. Tax treatment
depends on the individual circumstances of each client and
may be subject to change in the future. For guidance, seek
TRUST STRUCTURES
professional advice. The value of your investments can go
SUPPORT TAX MITIGATION
BONDS COMBINE
When used within a trust, onshore bonds o昀昀er
SIMPLICITY WITH FLEXIBILITY
down as well as up, and you may get back less than you
an e昀昀ective way to reduce IHT and simplify
One of the main appeals of bonds is their
invested. Tax planning & estate planning is not regulated
administration. Trustees can access a 5%
straightforwardness. Unlike other 昀椀nancial
by the Financial Conduct Authority.
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