With an insurance bond you are able to withdraw up to 5% per annum of the original investment without creating any tax liabilities. If you take 5% over 20 years and at the 20 year mark you have had your original investment amount back then at this point you may face a tax liability due to the remaining balance being your growth.If when added to your income it does not take you over the higher rate tax threshold then there is no further tax liability. If you are a higher rate tax payer you can still take your 5% per annum tax free. And if you later cross over to being a basic rate tax payer you may not face any more tax liabilities.Insurance bonds are also good for tax planning if you wish to make gifts.
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