Why an offshore bond?
If you're looking to invest in a bond, how do you make the decision to invest in
an onshore or an offshore bond?
Please click on the options below to see some general points that apply to all bonds
and some specific points which apply to offshore bonds.
Your financial adviser can help you decide whether to invest in an onshore or an
offshore bond by thoroughly assessing your individual investment needs and objectives.
You may be charged for any advice you receive.
- Control of the tax point. You can choose when to take the benefits, which can be useful if you are paying a lower rate of tax than when you took out the bond, or if you have moved to a different country with a lower tax rate.
- If you invest in a bond you can currently withdraw up to 5% of your original investment each year for up to 20 years, without triggering a chargeable event. This can be a tax efficient way of taking an 'income' from your bond. This benefit is cumulative, so you can carry forward your 5% allowance if you don't use it each year.
- Self assessment friendly. As bonds are a non income producing asset, you don't need to report anything to the Revenue until a chargeable event occurs.
- Segmentation. Your bond is set up as a series of individual policy segments, designed to give you maximum flexibility and the ability to minimise tax.
- Capital gains tax free switches. Fund switches within a bond do not trigger a liability to capital gains tax.
These benefits apply equally to onshore bonds and offshore bonds.
The value of your investment can go down as well as up and you may get back less
than the original investment.
Offshore bonds offer additional benefits to onshore bonds. These are:
- A wider fund choice now and in the future. Offshore portfolio bonds have an extensive fund range, as well as giving you investment flexibility, so that you have the potential to access future funds and investment opportunities as they become available.
- Offshore bonds benefit from 'gross roll up' which means that the investments within the bond grow virtually free of income tax and capital gains tax, although there may be tax to pay when you take benefits from the bond.
- Time apportionment relief. If you are likely to spend time living abroad and therefore be a non-UK resident, you can benefit from time apportionment relief for the time spent abroad.
The value of your investment can go down as well as up and you may get back less
than the original investment.