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To wrap or not to wrap - that is the question

Session: Thursday 21 October 2021

In days gone by, choosing between bonds and Open Ended Investment Companies (OEICs)was often seen as an investment decision. And to this day there are some investments that cannot be held as an OEIC and instead need to be held within a tax wrapper. But in this modern world of open architecture, OEICs can be held directly by the individual or indirectly through a tax wrapper.  

On this virtual seminar, Les Cameron, Head of Technical at Prudential, Graeme Robb, Senior Technical Manager and Vince Smith-Hughes, Director of Specialist Business Support, explore and debate the pros and cons of holding OEICs either directly, or indirectly through an insurance bond tax wrapper through a series of case studies.

Learning Outcome – to demonstrate an understanding of:

  • Taxation of insurance bonds
  • Taxation of OEICs 
  • Advantages and disadvantages of using OEICs within an insurance bond tax wrapper 
Featured Video

To wrap or not to wrap - that is the question

97 minutes

To claim your CPD certificate, test your knowledge with the questions below.

Write down your answers to each of the following questions and check your answers when you click through to claim your CPD certificate on the link below.

Test your knowledge

1. From an ongoing tax perspective the key difference between OEICs and bonds is:

a) OEICs produce income, bonds produce gains.

b) OEICs produce capital gains, bonds produce income

c) OEICs produce income, bonds are non income producing

d) both OEICs and bonds are non-income producing

 

2. The rate of capital gains tax suffered within an OEIC is: 

a) 10%

b) 0%

c) 20%

d) 15%

 

3. Bob and Bill both invested £10,000 in an onshore and offshore bond wrapper respectively.  They both bought the same OEIC portfolio and suffered the same charges. They received £1,000 of dividends, £0 of interest and their portfolios had £0 capital gains.

Whose bond will have the highest value? 

a) it's the same

b) Bob

c) Bill 

d) there won't be any growth.

 

4. The 5% tax deferred allowance is available to:

a) Individuals only

b) Individuals and Trustees only

c)  Individuals, Trustees and Corporates

d)  Individuals and Corporates only
 

To claim your CPD certificate, click here.

"Prudential" is a trading name of Prudential Distribution Limited. Prudential Distribution Limited is registered in Scotland. Registered Office at Craigforth, Stirling FK9 4UE. Registered number SC212640. Authorised and regulated by the Financial Conduct Authority. Prudential Distribution Limited is part of the same corporate group as the Prudential Assurance Company. The Prudential Assurance Company and Prudential Distribution Limited are direct/indirect subsidiaries of M&G plc, a company incorporated in the United Kingdom. These companies are not affiliated in any manner with Prudential Financial, Inc, a company whose principal place of business is in the United States of America or Prudential plc, an international group incorporated in the United Kingdom.