Guaranteed Income Bonds

From time to time NS&I, Banks, Building Societies and Insurance Companies offer Guaranteed Income Bonds.

The features of such an investment are:

  • Fixed income for a set term paid monthly or annually
  • Return of capital at the end of the fixed term

BEWARE – there are a number of issues with these Bonds

  1. The first issue is the  level of guarantee available, is there a Bank or other Institution underwriting the return of your capital? and if so, how secure is this company and therefore the guarantee of the return of Capital?
  2. Is the scheme covered under the Financial Services Compensation Scheme?
  3. There can be tax implications when the Bond matures. If you are a higher rate taxpayer, there may be more tax to pay and if you are over 65 there is a chance that you may lose access to a full Age Allowance for tax purposes in the year of maturity. So please take advice before purchase!
  4. If you have an emergency need for the money is it available before the end of the term in some cases, the only time it is paid back other than at maturity is on death

At Nicholls Stevens we can discus with you the types of Income Bond which is available and explain to you any risks or tax implications  and decide with you whether this is suitable for your needs so you are fully informed BEFORE you make the investment