Investment Bonds are medium to long term lump sum investments. An Investment Bond typically invests in an insurance companies life funds. This means that the underlying fund that the Investment Bond invests in pays Corporation Tax. For a basic rate tax payer there is no further liability to taxation as the fund price already makes allowance for any tax liabiliy. It is possible to take back 5% of the original capital invested each year without incurring further taxation. For a higher rate tax payer there can be some attractions for using Investment Bonds. Any gain or “profit” made can be spread over the life time of the Bond so that when the bond is finally encashed the charge to higher rate tax is minimised as much as possible. This is known as “Top Slicing”. Investment Bonds can invest in all kinds of sectors via the underlying life funds. Again it is vital to use funds appropriate to your risk and reward profile. Please call us for a fuller discussion.