Independent Financial Advisers
| Guaranteed Investments |
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How are guaranteed investments taxed? What are guaranteed investments? Guaranteed investments or structured products are financial instruments which offer a range of different terms and risk profiles. Basically, they promise to protect some or all of the money you invest whilst providing some growth on your investment or a measure of predefined income throughout the life of your investment. They are fixed-term products which means you have to be prepared to "lock in" your money for the term of the investment (often 5 or 6 years) but consequently they have the potential to provide enhanced returns. Care needs to be exercised to ensure that you select guaranteed investments for which the price paid for the reduced risk compared to a direct stock-market investment is fair. How are guaranteed investments taxed? Generally, if the investment pays out regularly, the returns are taxed as income and investors are liable to Income Tax at the highest marginal rate. Alternatively, if the investment objectives are to generate a lump sum at the end of the investment term, or capital growth, then the gains made are subject to Capital Gains Tax. However, it's not always as simple as this and the tax treatment of individual guaranteed investments can vary from the general rules. In addition, liability to tax will often depend on your personal circumstances. |
