Off shore bonds

If you are in the fortunate position to have more than one lump sum to invest and have the ability to defer paying tax on growth and withdrawals, you might have been wondering about offshore bonds and the benefits of “gross roll-up”.  Essentially this means gains are not subject to tax at source, apart from an element of withholding tax. So taxation is deferred until the bond is surrendered, in full or in part.

Another advantage of off shore bonds is 'top slicing relief’, which can in some circumstances reduce your higher-rate tax if there has been a gain at the time of a 'chargeable event. In the broadest of terms this means that the total gain made by the bond is divided by the number of years the investment has been held and referred to as the 'slice’. It is this that can then be added to your other income and tax is paid on it accordingly. If the slice was all within your basic-rate tax band, 20pc tax would be payable on the whole gain. If the whole slice is in the 40pc bracket, higher-rate tax would be payable on the whole gain. In cases where the slice crosses tax bands, the tax charged is a blended rate.

Off shore bonds may look attractive but before investing in them you should make use of your ISA and possibly pension allowances fully as an allowance is like an offshore bond, and ISA’s allow your funds to grow free of tax. Enable’s IFAs can help you find the best place for your savings.


Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE