Glossary · UK
What is Personal Portfolio Bond?
An offshore life-insurance bond where the policyholder can select the underlying personal assets, which triggers a punitive annual UK tax charge.
Full Definition
A personal portfolio bond (PPB) is a type of life-assurance investment bond - usually issued offshore - whose return is linked to assets the policyholder (or a connected person) can personally select, such as specific shares or property, rather than to a permitted index or a widely available internal fund. UK tax law treats a PPB harshly: instead of the normal deferral that applies to life bonds, an annual deemed gain arises equal to 15% of the premiums plus previous deemed gains, taxed as a chargeable event under the income tax rules. This compounds each year, so PPBs are generally regarded as something to avoid. The rules exist to stop investors using an insurance wrapper to shelter a privately managed portfolio from income tax and capital gains tax. If a bond only holds permitted assets (collective funds, cash, listed securities held within the insurer's fund), the PPB charge does not apply. Specialist advice is essential before holding or restructuring one.