What is a personal portfolio bond?

A life policy whose benefits can be linked to assets the policyholder (or a connected person) personally selects — beyond the “permitted property” categories such as collective funds and listed shares chosen from a wide range. If the policyholder can pick the specific underlying assets, the bond is likely a PPB (ITTOIA 2005 ss.516–520).

How is the personal portfolio bond charge calculated?

An annual deemed gain of 15% of the total premiums plus all prior PPB gains arises on the last day of each insurance year (ITTOIA 2005 s.522). Because each year’s gain is added to the base, the charge compounds — and it applies whether or not anything is actually withdrawn.

Does top-slicing relief apply to a PPB gain?

No. Top-slicing relief is not available on the annual gains arising on personal portfolio bond events. That, combined with the compounding 15% charge, makes a PPB an expensive structure to fall into unintentionally.

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The personal portfolio bond charge: a 15% deemed gain, every year

Choose the wrong underlying assets inside an offshore bond and it becomes a personal portfolio bond — a punitive annual charge of 15% of premiums, compounding, that no relief softens.

Based on ITTOIA 2005 ss.515–526 and HMRC’s Insurance Policyholder Taxation Manual (IPTM3600, IPTM3650).

5 min read · Last reviewed 19 Jun 2026

A personal portfolio bond (PPB) is the trap a bond falls into when the policyholder can hand-pick the underlying assets. The penalty is severe and automatic: a deemed gain of 15% of premiums is taxed every year, compounding, whether or not a penny is withdrawn — and with no top-slicing relief to soften it.

The rule

A policy is a PPB if its benefits can be determined by reference to assets the policyholder, or a connected person, can select — other than the categories of permitted property (broadly: collective investment schemes, funds internal to the insurer, cash, and shares/securities chosen from a sufficiently wide range), set out in ITTOIA 2005 ss.516–520 (IPTM3600). Pick specific shares or bespoke assets and the bond is caught.

Once caught, ITTOIA 2005 s.522 (IPTM3650) deems a gain of 15% of the total premiums paid plus all prior PPB gainsto arise on the last day of each insurance year (other than the final year) — a “personal portfolio bond event”. Because each year's 15% is added to the base for the next, the charge compounds. And — unlike an ordinary bond gain — no top-slicing relief is available on these annual gains.

A worked example

The statutory 15% formula applied (self-checking arithmetic, not a pinned HMRC example): a £200,000 single-premium bond that is a PPB, nothing withdrawn.

PPB annual deemed gain — £200,000 premium · 15% of premiums + prior gains

Year 1 — 15% × £200,000: £30,000
Year 2 — 15% × (£200,000 + £30,000): £34,500
Year 3 — 15% × (£230,000 + £34,500): £39,675
Top-slicing relief on these gains: none

Three years in, more than £100,000 of deemed gains have been taxed — on a bond that may have paid out nothing — and the charge keeps compounding. There is no top-slicing relief to spread any of it.

The common error

The error is structural and easy to stumble into: holding personally-chosen assets — a portfolio of specific shares, say — inside an offshore bond, turning an ordinary wrapper into a PPB and switching on the annual charge. The fix is the permitted-property line: keep the underlying holdings within the allowed categories (collectives and the like). Whether a bond is a PPB matters because the 15% annual charge falls outside the ordinary chargeable-event rules — and, unlike an ordinary bond gain, it does not qualify for top-slicing relief.

ITTOIA 2005 ss.515–526 (PPB regime ; s.522 the 15% computation) · IPTM3600 · IPTM3650

Common questions

What is a personal portfolio bond?: A life policy whose benefits can be linked to assets the policyholder (or a connected person) personally selects — beyond the “permitted property” categories such as collective funds and listed shares chosen from a wide range. If the policyholder can pick the specific underlying assets, the bond is likely a PPB (ITTOIA 2005 ss.516–520).
How is the personal portfolio bond charge calculated?: An annual deemed gain of 15% of the total premiums plus all prior PPB gains arises on the last day of each insurance year (ITTOIA 2005 s.522). Because each year’s gain is added to the base, the charge compounds — and it applies whether or not anything is actually withdrawn.
Does top-slicing relief apply to a PPB gain?: No. Top-slicing relief is not available on the annual gains arising on personal portfolio bond events. That, combined with the compounding 15% charge, makes a PPB an expensive structure to fall into unintentionally.

Sources & grounding

A policy is a personal portfolio bond if its benefits can be determined by reference to assets the policyholder (or a connected person) selects, other than the categories of permitted property (ITTOIA 2005 ss.516–520; IPTM3600). Verified against gov.uk IPTM3600, 2026-06-19.
The PPB gain is 15% of (total premiums + prior PPB gains), deemed to arise on the last day of each insurance year other than the final one — a “personal portfolio bond event” (ITTOIA 2005 s.522; IPTM3650). Verified against gov.uk IPTM3650 / IPTM7830, 2026-06-19. The 15% figures below are the statutory formula applied (self-checking arithmetic), not a pinned example.
No top-slicing relief is available on the annual PPB gains (IPTM7710/7830). Verified against gov.uk, 2026-06-19.

For planning and illustration purposes only. Verify all inputs against source documents. This explainer does not constitute financial or tax advice.