Offshore investment – bonds, tax, benefits
Investment in a bond gives you the flexibility of investing now, and enjoying returns on your investment, with no tax payable.
An offshore bond (wrapper) is ideal if you are:
- Planning to move abroad
- You expect to be a non-taxpayer
- A basic rate taxpayer when you finally retire or, more importantly, when you cash in your bond.
Offshore investment – tax
A charge to income tax can only occur on the trigger of a chargeable event while you are a UK resident, caused by any of the following:
- Partial encashment exceeding more than 5% of the original investment amount per year
- Assignment for money, or money’s worth
- Full encashment.
HMRC considers the 5% amount coming from an offshore investment bond as return of original capital, rather than coming from any income generated within the bond, and therefore not taxable.
Offshore investment – main benefits
- The ability to switch from cash deposits into collective investments with no initial costs
- No initial charge to go into the funds available within the bond wrapper
- They are deemed as a non-income producing asset, therefore unlikely to generate a potential income tax liability, unless it’s a chargeable event
- Underlying investments can be held within an offshore investment bond can range from cash deposits to collective investments
- An offshore bond wrapper defers immediate liability to UK income tax and allows you to extract up to 5% per annum, on a cumulative basis of your initial capital investment amount.
Offshore investments – Compare The Financial Markets
As with every potential investment decision, careful consideration and thorough research is absolutely vital.
Talk to the experts at Compare The Financial Markets.
Compare overseas investment and offshore investment bonds and funds for 2018
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