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Structured Products

What is it? 

A structured product is a single premium investment that provides guaranteed growth or an income either on a monthly, quarterly or annual basis for a specified term at which time potentially the original capital investment is returned.  Capital return is often conditional and is usually based on the performance of an Index (i.e. FTSE-100), or a basket of shares or collective investment funds.

Who is it for?

They are designed for those individuals who may need a relatively high level of income or growth with some capital guarantee. They are not designed for those clients who may need access to their capital during the contract term. 

How does it work?

The bond is usually related to an Index such as the FTSE 100, Eurostoxx 50 or NASDAQ. At the end of the term capital is returned in full provided the selected index (indices) have not fallen by more than a certain percentage.  If this level is breached then the full capital return is not guaranteed and may be reduced proportionately.  Such bonds tend to have a term of 3 or 5 years.  There are variations on this basic design and hence providers usually make limited issued of these products.

Structured products can be held within ISA’s, PEP transfers, Pension schemes or they can be held personally.

ISA transfers and pension schemes can be used to help shelter income (and possible capital growth) from tax.

Tax situation

Investors have no personal liability to UK income tax or capital gains tax for investment held within an ISA.

If the investment is into UK funds via a bond, then any income payments are net of tax and there is no further tax liability to lower or basic rate taxpayers.  Higher rate taxpayers may have an additional income tax liability.

If investors do opt for capital growth instead of income, then they will be subject to capital gains tax over and above the annual exemption, after allowing for taper relief.

Ashton Hoyle will only recommend structured products that offer our clients a 100% capital guarantee unless instructed otherwise.

Whatever your financial advice requirements are, you can be assured that Ashton Hoyle are well positioned to provide an innovative answer and we look forward to speaking to you on any financial matter. Contact us now to see how we can help.