What Are UK Capital Bonds?

Capital bonds are UK-based bonds that are structured to provide regular interest payments and an increase in the final principal that you get back when the bond reaches maturity.

Regular types of bonds pay you interest over the life of the bond.

When these bonds reach maturity, you are given back your original investment (known as the principal).

The only return you get if you hold the bond to maturity is the interest received.

Making Money from Capital Bonds

With capital bonds, the investor gets a return from the interest earned over the term of the bond.

In addition to the interest payments, the investor also gains from the appreciation (increase) in their initial investment.

UK Capital Bonds CalculationImage Source: Pixabay

Most capital bonds are designed with at least five years before maturity. If you sell your capital bond before the maturity, you most likely will be charged an early termination fee.

How Can You Invest in Capital Bonds?

As an investor, you can invest in capital bonds through a broker that is based within the United Kingdom. 

Those looking to reduce their capital gains tax can invest in capital bonds via an offshore broker that is based in the Isle of Man, the Channel Islands, and other tax heaven locations.

What Are the Minimum Investment Requirements?

On average, you need to have at least £10,000 in order to invest in capital bonds. There are no maximum limits.

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