Your clients’ funds can grow free of tax while they are held in the bond, with the exception of withholding tax, which is deducted at source from certain funds. And their funds can be switched free of tax too. They’ll usually only pay income tax on any gains when they take money out. That means they’ll be able to have some control over when they pay the tax, allowing them to pay this at a convenient time.
That’s not all: they can also take up to 5% of their original investment amount each year, up to a total of 100% of their original investment amount over twenty years, through regular or one-off withdrawals, without any immediate tax liability. And if they don’t use the full 5% annual tax-deferred entitlement in one year then it can be carried over to following years – so they don’t miss out.
Sometimes your clients might need to take a lot more than their 5% entitlement. To help with this and allow even more tax-planning flexibility, Delegation is split into lots of identical policy segments, which can all be cashed in or assigned individually. If your clients do go over the 5% tax-deferred entitlement the extra amount may be liable to income tax.