Single Premium Insurance Bonds can be a very tax efficient investment product as the tax rules allow up to 5% of the capital value to be withdrawn tax free each year. If no withdrawals are made that year the 5% tax free amounts accumulate so that after say 6 years 30% could be withdrawn from the Bond tax free.

Those seeking to make withdrawals should take professional advice before doing so. The tax consequences of exceeding this 5% limit are that the excess amount is taxable as income.