Prudential Bond.

BostonR

To add - we have used the same FA for many years who is part of a well-known IFA.

wjr4

BostonR said:

To add - we have used the same FA for many years who is part of a well-known IFA.

Are they a FA or IFA?

wjr4

BostonR said:

Thank you to everyone who has responded - very much appreciated. Some additional information:
My wife and I are both retired - aged 62.
Our joint net pension income from various sources is circa £70K pa.
We have £650K in cash - hence the opportunity to invest.£250K of that amount is from my tax free lump sum just taken. I am just within my lifetime allowance.
I have £250K in vested untaken share income over the next 2-4yrs.
We have no debts.
House is fully paid for with a value of £1.6M.
We would like to invest £400K in a conservative vehicle, hence the Pru Investment Plan. We wanted to be able to access cash reasonably quickly, if we decide to purchase a villa abroad.
Of the £250K in cash remaining we want to gift £100K to our sons to enable them to get a mortgage. We want to invest £50K in ISA's and retain £100K in cash.

What is the breakdown between your own income and your wife’s income? 

Where will you be retaining the cash? 

You can only put £40k into ISAs for the current tax year, not £50k. 

what about inheritance tax? Would you use the £3600 each per annum to keep this outside of your estate for IHT purposes? Was this mentioned? What is the plan for IHT? 

If you are investing and you want to access cash quickly, you shouldn’t be investing it into an investment bond at all, you should be keeping it in cash. 

What are the fees to set this up? 

dunstonh

We would like to invest £400K in a conservative vehicle, hence the Pru Investment Plan.

First and foremost, that is a tax wrapper that has a range of investments.   No reason why conservative investments cannot be used in other tax wrappers.

We wanted to be able to access cash reasonably quickly, if we decide to purchase a villa abroad.

In which case you would not invest that money until you have decided.  However, even if you did wish to invest it, you certainly wouldnt use an investment bond as you cannot reasonably access it quickly due to the tax charges that could apply.   Withdrawals from investment bonds are the most complicated of all the investment wrappers.

Of the £250K in cash remaining we want to gift £100K to our sons to enable them to get a mortgage. We want to invest £50K in ISA's and retain £100K in cash.

What about next years ISA allowance, and they year after?    An investment bond may be limited in how you can do that without triggering tax.  Remember that the investment bond suffers internal taxation greater than any other tax wrapper and you can get hit again on withdrawals.  A GIA has some small annual allowances but even if hit for full tax on that, it would be less than an onshore bond.

What about the pension wrapper?  A non earner may not have much in a single year but husband and wife, annually until 75 can add up.