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Standard Life issues bonds advice

Cost-conscious investors should not pass up their bonds in order to save on tax, Standard Life has advised.

Many consumers are thought by the firm to be planning to convert their bonds following the recent Budget's failure to cut the tax levied on them.

Currently, bonds are taxed at around 20 per cent on gains - however, investors who pay the 40 per cent rate of income tax could see this charge double when they cash their bonds in.

These people "need to take account of a range of factors such as the individual's tax position, the value of the investment and how long they intend to hold it, the underlying asset mix [and] the rate of tax they are likely to be paying in future years," the firm said in a statement.

John Lawson, head of pensions policy at Standard Life, added: "For some, [switching] might be the worst thing to do, particularly higher-rate taxpayers who expect to become basic-rate taxpayers in the future, as these people could end up incurring an entirely avoidable tax charge."

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