New research from Chesnara Life (UK) shows 43% of advisers have increased their usage of onshore investment bonds with clients in response to tax rises on investments.
For 36% of advisers, cuts to the Capital Gains Tax allowance and the freezing of the exemption until April 2031 have driven the use of onshore investment bonds, while 35% said Inheritance Tax (IHT) and estate planning is a major influence.
The Onshore Bond Adviser Sentiment Survey found 32% of advisers are using onshore bonds to help clients enhance the tax efficiency of their financial planning, 31% said onshore bonds are playing a bigger role with clients as part of intergenerational planning, and 30% cited the impending inclusion of unused defined contribution (DC) pensions in estates from April next year.
Mark Lambert, head of onshore bond distribution at Chesnara Life (UK), said: “The tax treatment of onshore investment bonds has remained the same while dividends and CGT allowances have been cut.
“We also have the change to the IHT status of unused DC pension funds rapidly approaching causing further concern to clients.
“That stability surrounding the onshore investment bond has further enhanced the appeal of the product as a key part of tax efficient financial planning making them relevant to a wider number of advisers clients now and in the future.”
