The case for bonds

The key changes heralded by new capital gains tax (CGT) rules revolve around the removal of the 'taper relief' and indexation allowance, and the implementation of a single rate of CGT of 18% for collective investment. Before 6 April 2008 a higher rate tax payer holding a collective investment would pay tax at 40% on any realised gains over the annual exemption. However, they could benefit from 'taper relief', depending on how long they had held the asset. This ranged from a 0% reduction for less than three years to a 40% reduction for ten or more years. This meant that higher rate tax p...