Withdrawing funds from insurance bonds

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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Bonds can be a very tax efficient investment product as the tax rules allow up to 5% of the capital value to be withdrawn tax free each year. If no withdrawals are made that year the 5% tax free amounts accumulate so that after say 6 years 30% could be withdrawn from the Bond tax free. The tax consequences of exceeding this 5% limit are that the excess amount is taxable as income.

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