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Offshore investment

What are offshore investments?

Quite literally, offshore investing is investing your money in investment portfolios situated in financial centres outside of the United Kingdom (remember portfolios in this case are simply the tax wrapper).

For many people in the millionaire asset group there are advantages to investing offshore, particularly the tax deferral benefits (ie. you pay tax on the interest earned only when the money is brought back to the UK).

What are the benefits of offshore investments?

There are a number of benefits:

  • Thousands of funds are available to help diversify your investment portfolio
  • Gross roll-up (investment gains are not subjected to tax at source [with the exception of an element of withholding tax])
  • Almost tax-free growth (for up to 10 years plus the investment term)

You should discuss the benefits of using offshore bonds and pensions with an independent financial adviser before undertaking any such investments.

What sort of offshore investments can you help me arrange?

What are the benefits of Offshore Pensions?

  • No need to purchase an annuity or pay UK tax charge on death
  • Leave all unused pension funds to your beneficiaries free of tax
  • Much greater investment freedom
  • Tax free lump sum
  • Total diversification – onshore / offshore funds
  • Take income from your pension in a much more tax efficient way
  • Tax income and benefits in currency of your choice
  • Protection against possible future creditors (dependent on QROPS jurisdiction)
  • Greater confidentiality

What are the benefits of Offshore Bonds?

A popular form of offshore investment, an offshore bond is a tax wrapper that allows you to hold a variety of investment funds (for example, Open-Ended Investment Companies [OEICs] and unit trusts). 

This type of bond is written under life assurance rules and although all income is rolled up inside the bond (so it generates no income inside a trust), it does grow in the same way as any other ‘normal’ investment would.  This small tax point means that because it generates no income, an annual tax return does not have to be produced for the trust, thus saving on the costs of appointing an accountant to complete this annually. 

Also, as a high earner or small business owner, you may currently be a higher-rate taxpayer, but when you retire you will pay a lower rate of tax when you then cash in the offshore bond.  Alternatively, you could assign the bond to someone in a lower tax bracket to reduce the tax liability.  Tax advice is essential when considering offshore investments.

Good financial advice from an experienced financial planner as part of a comprehensive financial plan is essential.

In most instances, we wouldn’t recommend the use Offshore Bonds unless the assets where being placed into trust.

Any questions on offshore investment?

Please call us on 01582 839280 if you have any other questions or Email us.