The UK’s financial advisers are turning to international bonds for tax and estate planning purposes, with usage expected to rise over the next five years, according to research from Canada Life UK, a life insurance and investment services provider.
The study, conducted in partnership with consultancy the lang cat, found that 71% of firms already using international bonds expect to increase their use over the next five years. 66% reported that they are recommending international bonds more often than they were five years ago, while only 1% said usage had declined.
Among advisers not currently recommending international bonds, 77% anticipate doing so to some extent within five years. The findings suggest a broadening role for international bonds within holistic financial planning, particularly in terms of tax efficiency and intergenerational wealth transfer.
Inheritance tax planning was cited by 80% of advisers as the main reason for using international bonds, followed by efficient gifting (54%), ahead of income provision and retirement savings alternatives.
When selecting a provider, advisers ranked servicing quality, reputation and range of estate planning or trust options as the most important factors, with tax and technical support also noted by nearly half.
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Canada Life said the research reflects the growing recognition of international bonds as a flexible planning tool that aligns with clients’ long-term estate and succession objectives.
Sean Christian, chief executive, Canada Life International and Managing Director – Wealth Division, Canada Life UK, commented: ‘The international bond market is gaining real momentum as advisers look to solutions that can flex with changing client needs.
International bonds are a regulated and widely recognised solution that comprises a wide range of investments and valuable estate planning opportunities. A shifting tax landscape, with changes to capital gains tax allowances and inheritance tax, means advisers are seeing clear demand for this type of solution.
With further tax changes speculated at the upcoming Autumn Budget, products like international bonds are likely to come into sharper focus as advisers look to solutions that enable clients to pass on wealth efficiently to their loved ones.”
