Using Onshore Bond to pay for WOL
MuseAndAmuse
Member
I know the individual payments would be classed as gifts.
What are the considerations if using a bond to pay for a wol and has this type of arrangement ever been challenged by hmrc?
What are the considerations if using a bond to pay for a wol and has this type of arrangement ever been challenged by hmrc?
Comments
I'm not aware of any challenges to this - you can spend your bond withdrawals on what you like.
Remember bond withdrawals are capital not income so no exemption if >3k
I don't think I'd set up a bond to pay for WOL compared to, say, a GIA.
GIA generates income, pays tax as it goes, generally at a lower overall rate than a bond (especially as currently death wipes out gains), is more flexible, is usually lower cost.
Bond is tax-deferred, so a future liability is being created. Premiums need to be within the 5% allowance for the planned lifetime of the policy otherwise there will be tax in lifetime, withdrawals are capital as Les points out, so more at risk of IHT consequences.
You can use a bond, but it definitely wouldn't be my first choice.
I'd consider a bond as a low tax, low admin, simple way of generating a regular payment amount :-)
Other options are clearly available.