Onshore Bonds

An Onshore Bond is a non-qualifying life bond, which allows you to accumulate and benefit from a cash sum which gives arise to no basic rate tax liability.

In addition you can make withdrawals of up to 5 per cent of your initial investment for each year, up to 20 years, without incurring an immediate tax liability no matter what your tax status.

Where the 5% allowance is not withdrawn it can be carried forward and used in subsequent years. Where withdrawals exceed the 5% allowance the excess is assessable to income tax at the end of the policy year which the withdrawal is taken.

If you are a basic rate taxpayer when you cash in your bond you will have no further tax liability. At the point which all funds are withdrawn, all withdrawals are added to the total proceeds and the liability to income tax assessed on the total gain (in relation to either an individual cluster or whole account).

It is a medium to long term investment and therefore may not repay the full amount invested if encashed within the first few years.