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Bonds versus Collectives Calculator
What is a Bonds versus Collectives Calculator?
The Bonds versus Collectives calculator is a professional modelling tool designed to help financial advisers quantify the net long-term benefit of holding investments within international portfolio bonds or directly held collectives, including those held in a general investment account (GIA).
It doesn’t just compare the net growth projections, it simulates the real-world tax and planning impact of investment structure over time, using adviser-provided inputs across:
- Investors current tax rates and at future encashment
- Availability of personal, dividend, and CGT allowances
- Length of investment horizon
- Underlying portfolio yields and turnover of assets
- Assignment scenarios and trust planning needs
Why This Calculator Exists
Following increases to Capital Gains Tax rates in the Autumn Budget and further freezes to income tax threshold and reductions to the capital gains annual exempt amount, the choice of investment is now subject to numerous complex factors.
This calculator:
- Shows the net returns across different investment horizons
- Shows how wrapper choice affects compounding and net returns
- Highlights where international portfolio bonds preserve flexibility, deferral, and control
- Helps to justify investment structure selection with modelled projections
- Can be used with other calculators such top slicing relief
It’s designed by technical experts for professionals; it is not a retail tool, but a bespoke service to support planning decisions.
How It’s Used
You supply:
- Basic client assumptions (investment size, available tax allowances, tax rates)
- Intended investment strategy (percentage growth, income (interest and dividend), active vs passive in terms of annual growth crystallisation)
- Key planning aims (tax deferral, IHT, succession, etc.)
We provide:
- A clear, side-by-side comparison of projected net outcomes assuming the investor is either a higher or additional rate taxpayer throughout the accumulation period.
- Backup from our Regional Sales managers to highlight planning opportunities
- Technical Sales Bulletins if applicable
In Short…
Effective financial and estate planning extends beyond investment performance – the structure through which assets are held can have a profound effect on net outcomes. Whether you are planning for retirement, intergenerational wealth transfer or income efficiency, understanding the right tax structures is essential. Similarly should tax rates change, investing via different tax structures can enhance flexibility and wealth accumulation.
The Bonds versus Collectives Calculator is a decision-support tool for advisers who want to back up their investment structure recommendations with numbers, not just opinion.
Get Bespoke Results
Want to compare outcomes based on your client’s investment mix, return assumptions, or tax status?
Contact your Regional Sales Manager for tailored analysis and support with:
- Investment structure planning to unlock long-term value
- Case studies and scenario modelling
- Top slicing and time apportionment calculations
- Access to a wide range of technical sales bulletins
If you are unsure who your Regional Sales Manager is, please contact [email protected].
Our Relationship Management team will be happy to connect you with the right person.
Examples of outputs
Active Investment vs Passive Investment.
Active Investment: Balanced return with dividend, savings income and annual part realisation of gains
Investment: £2,000,000
- Capital Growth: 1% p.a.
- Dividend Yield: 3.5% p.a.
- Cash/Savings Return: 0.5% p.a.
- Portfolio Turnover (Growth Realisation): 40% p.a.
Net Portfolio Value After 20 Years:
| Wrapper Type | Net Value After 20 Years |
| Investment Bond – No Exit Tax | £5,300,000 |
| Investment Bond – 20% Exit Tax | £4,640,000 |
| Investment Bond – 40% Exit Tax | £3,980,000 |
| Investment Bond – 45% Exit Tax | £3,810,000 |
| Direct Portfolio (after taxes) | £3,750,000 |
Key Insight:
Even with modest growth and high portfolio turnover, the investment bond delivers materially higher net returns, especially if tax planning enables a 0% or 20% tax rate on encashment (e.g. through top slicing relief or assignment to a lower-rate taxpayer).
Passive Investment: High-growth portfolio, generating no income and no reinvestment of assets:
Investment: £2,000,000
- Capital Growth: 5% p.a.
- No dividend income
- No savings income
- No realisation of gains (buy-and-hold)
Net Portfolio Value After 20 Years:
| Wrapper Type | Net Value After 20 Years |
| Investment Bond – No Exit Tax | £5,300,000 |
| Investment Bond – 20% Exit Tax | £4,640,000 |
| Investment Bond – 40% Exit Tax | £3,980,000 |
| Investment Bond – 45% Exit Tax | £3,810,000 |
| Direct Portfolio (after taxes) | £4,510,000 |
Key Insight:
Where an investor follows a buy-and-hold strategy with no income, a direct holding may outperform if tax on bond encashment is at 40% or higher. However, with careful planning to reduce exit tax exposure (e.g. staggering withdrawals, assignment to other individuals thereby minimising any tax liability by using allowances and lower tax bands), the bond remains highly competitive.
The statements assumptions and output are based on current taxation practice in the Isle of Man, Ireland and the UK as at 22/07/2025. Tax treatment is subject to change and individual circumstances.
Other features to consider
The calculator projects the net return of different investment structures based on the assumptions provided.
However, one of the main benefits of bonds is the ability to assign the bond to another individual who is over 18. Provided the assignment is not for any consideration (money or money’s worth) then this assignment is not taxed as a chargeable event and the person who receives the bond is instead assessed to tax at their marginal rate of income tax when subsequent chargeable events occur.
This assignment functionality is unique to bond wrappers and, when considering the calculator outputs, this feature should also be considered as a relevant factor. Other aspects such as top-slicing relief and time apportionment relief (for those who have spent time overseas) can further reduce a policyholder’s liability to tax and these are not illustrated on the calculator. Finally, bonds are also recognised in many other jurisdictions and may therefore provide some portability options for clients.
Resources
For more technical resources please visit our Technical Briefings page