Q on investment bonds vs OEICs

Would I be right in thinking that as a bond is taxed at 20% within the bond, whilst an OEIC pays no tax and the investor only incurs tax on encashment, she would be better off usinbg an LEIC as the fund would grow more due to favourable tax, and any encashents could ultilise he CGT allowance, as opposed to part/surrenders of bonds?

Nearly there.

Investment bonds are virtually the same as OEICs in respect of income. So, if the portfolio is heavy in income, there may be little difference. Its the growth on the assets that get taxed at 20%. However, life companies still benefit from taper relief so you tend to find that the effective taxation is closer to 13%.

Investment bond funds are often cheaper than their unit trust equivalent (depends on how you buy it and who you use).

A potentially chargeable gain on OEICS would occur on fund switches, not just sales (although a switch is technically a sale). Switches within the bond create no tax liability.

Investment bonds income does not go towards income for age allowance reduction purposes. Investment bonds are also not included in pension credit means tests or local authority care means tests.

So, you see, its not quite as clear cut. Typically larger investments become better in investment bonds for basic rate taxpayers. Smaller ones are better in OEICs. Especially if you bed & ISA each year. I usually work on the assumption that £100k is the sort of level where bonds start to get better than OEICs. Although the asset makeup of the portfolio can swing that in either direction.