INVESTMENTS – Offshore Bonds

Offshore Bonds are usually offered by the Subsidiaries of UK Life Companies and are typically run from Luxembourg, Isle of Man and the Channel Islands.

The advantages of Offshore Bonds are that they grow free of UK Tax, which is known Gross Roll Up. There may be a small Withholding Tax charged, nevertheless the Gross Roll Up can offer a significant increase in performance. This means that the fund has the ability to grow faster than its UK counterpart.

However, Offshore Bonds do have their downsides. The charges of these bonds are in some cases quite expensive and can reduce the value of their tax efficiency. More importantly, when the monies are encashed this can lead to a tax charge at 10%, 22% or 40%. The gain is Top Sliced and added to the Investors income and will normally lead to a tax charge.

Overall, the compounding effect of the Gross Roll Up over a long time can significantly increase the overall return even taking into account the taxation implications on surrender.

To talk to one of our advisors, call 0800 3893345 or email info@city-financial.co.uk