Guaranteed Income Bond
A single premium investment policy that guarantees a fixed rate of return, which can be distributed as regular income or accumulated until maturity. The capital is returned in full if held for the investment term.
What are the investment terms? These are chosen by you and will normally be for a set term of years from 1 year to 5 years duration. Special terms are also available for a set number of months (i.e. 15 months) for larger contributions (over £50,000) by negotiation. To check out the current rates, click to select:
How much can invested? The minimum Bond investment is usually £5,000, the maximum is generally unlimited.
How are the returns secured? The Bond has three levels of financial security:
- The Assets - The Provider buys Corporate Bonds from reputable (AAA or AA rated) companies.
- The Obligation - Even if the securities default, the Provider underwrites to make good this loss.
- The Provider - If the Provider goes bust, the plan is covered by the Financial Services Compensation Scheme. (The first £2,000 of the policy value is covered 100%, the remainder is 90% covered with no upper limit).
Are these Bonds available as an ISA? No. The Bond is only available as a single premium investment.
What if I die before maturity? 101% of the current value or 100% of the original investment (less income paid), whichever is the greater, is paid to your estate.
What if I need my money back before maturity? The Provider will offer you a surrender value. However this is not guaranteed to equal your original investment which depends on what happens to interest rates during the period the Bond is held.
What happens on maturity? The guaranteed return of capital will be paid to your designated bank account. However, a few months prior to the maturity you will be mailed and asked if you wish to 'roll-over' the investment into another Bond. If you do so the higher rate tax liability (for 40% taxpayers) is deferred.
Bonds can be written into trust prior to maturity. Whilst this changes ownership, higher rate taxation is still borne by the original plan holder. Bonds can also be assigned to other people (who then assume any higher rate personal taxation liability for the gains) prior to maturity.
What happens if interest rates change? The terms on offer are subject to change at any time and may be different to those quoted but once an application is submitted, the rates are fixed for the term selected.
Discounts
If you are investing a large sum we may be able to improve on the quote terms.
For a specific quote contact our team on 020 7189 9999
Taxation
Returns are quoted 'net' of standard rate taxation.
If the holder is a higher rate payer (40%), a further 20% tax is due, calculated on the income or growth.
As the returns are quoted 'net', they need to be grossed up to be compared with Bank and Building Society deposit rates, Gilts and national Savings.
The tax credit cannot be reclaimed, which makes these Bonds inappropriate for non taxpayers, overseas investors, pensions and company investments.