Lesley McPherson, communications director of Aegon UK said that there had been “a lot of on-going discussion last Thursday and Friday” but with no further statements, and likewise, with Canada Life.
This time lag leaves existing clients in an unclear position and question marks hanging over the future of these two bond products.
But other providers, such as Standard Life International’s Julie Hutchison, head of international technical insight was more definite in her post Budget comments: “No-one can be in any doubt about the prevailing approach now being taken towards multi-layered or aggressive tax planning.”
The Aegon scheme, called the Wealth Planning Account, where gains from an investment bond were left behind in a final segment, was aimed at clients with sophisticated tax affairs with a minimum of £150,000 to invest “who want the choice to cash in almost all their capital without triggering a chargeable gain’, according to marketing material.
The Aegon statement read as follows, “HMRC introduced proposed legislation in this week’s Budget which appears to stop the tax advantages of our WPA offshore bond contract. As the legislation takes effect immediately we have taken the precautionary measure of removing the product from sale until final clarification is received. No other of our bond contracts are affected by this proposed legislation on segmented bonds. We’ll be keeping advisers fully informed as the proposed legislation progresses through the Finance Bill process."
Canada Life’s Accelerated Access Account (AAA) consists of 100 separate policies and is so structured that no gain will arise for the surrender of the first 99 policies.
The Canada Life statement said: “Following the Budget on 21 March, we have suspended the Accelerated Access Account (AAA) product. The proposed legislation is being analysed by our legal advisers and we will make a decision about the future of the product after we receive their advice.
Investments made before 21 March 2012 appear to be unaffected by the Budget proposals and this is an area where we are also seeking legal advice.Although disappointing, the action taken against this product will not result in any significant loss of new business for Canada Life International as it was a specialist arrangement used for a specific purpose and in 2011 accounted for less than 2% of total sales.”
