The investment allows for a 5% withdrawal of the original capital per year without any immediate liability to taxation as this is considered a return of capital.  However, should a greater sum than 5% be withdrawn this could incur a chargeable event.

If the policyholder is a higher rate taxpayer or the income taken pushes those into the higher rate tax bracket additional taxation may be incurred.  When the Investment Bond is encash any investment growth achieve may be subject to income tax.

Withdrawals made can pay an income on a monthly, quarterly, half yearly or annually basis.