Contact: Sorrelle Cooper
Deloitte
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The Chancellor is punishing thousands of wealthy savers by closing the door on a strategy that has been used to enhance returns on cash based investments within an insurance bond.

Stuart Davies, wealth advisory director at Deloitte, said: The repayment of commission to investors, which is deemed to be exempt from tax through a Statement of Practice, has been used to provide artificially high returns on cash and enhance returns.

“This is a common investment strategy, usually aimed at higher levels of investment. Today’s Budget will effectively stop this practice for investments above £100,000 for short term policies. This will hit a relatively small proportion of investors, but a large amount of money invested schemes such as this. Investments can be for many millions of Pounds.

“The new legislation applies to policies invested in or updated from today, however, the existing Statement of Practice includes a general anti-avoidance provision, meaning that returns already received could still be taxable.”

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