Flexible, tax efficient and easy to administer, offshore portfolio bonds hold many attractions for investors.Contributed by Timothy Ross
PRIVATE CLIENTS, particularly those with substantial capital sums to invest, are demanding greater investment choice and diversity than ever before. The emergence of wealth management operations and bespoke financial planners have further advanced the popularity of any investment medium that can offer high levels of investment flexibility within the surroundings of a tax-efficient wrapper. Following pension simplification and a general reduction in the number of tax-efficient solutions available, the allure of offshore single premium investment bonds from an investment and tax deferral perspective remains considerable. The principal advantage of a portfolio bond in the form that is offered by most offshore life assurers is the breadth of investment choice. Indeed, when considering the general options available for investors (including unit trusts, OEICs and investment trusts) the offshore bond route offers an excellent way to tailor an investment strategy precisely to the needs of individual clients.
These offshore portfolio bond providers carry out an element of due diligence that needs to be undertaken for investments that are not familiar to the life office providing the offshore bond wrapper. The life office - as the scheme administrator - will often wish to satisfy itself of the suitability of certain investments. This is often the case with any investments that are not regulated; they either have relatively poor liquidity (certain hedge funds) or contain an element of gearing. In general terms, however, the flexibility and choice afforded by offshore bonds compares very favourably with any other investment medium. Perhaps one of the key attractions of offshore wrappers of this nature is their administrative simplicity. As non-income producing assets there is a considerable cost saving in administrative and professional fees.
As offshore bonds offer a route to genuine tax deferral, they have found great popularity with strategies for inheritance tax planning. It is generally accepted that single premium investment bonds provide a highly efficient investment vehicle for trusts. Consider the need to rebalance investment portfolios to reflect either changing personal circumstances or economic conditions within an environment where tax is paid on any fund disposals. Progressing this theme, investments held within an offshore bond wrapper also avoid the problem of a compromised investment strategy where large capital gains inherent in investment portfolios inhibit the ability to make decisions on investment grounds alone. A further matter to establish with any provider of offshore portfolio bonds relates to the dealing procedures, it is highly desirable to look for a company that ensures all trades are conducted on the best possible terms for the client. In summary, the flexibility and choice of an offshore portfolio bond, when coupled with its financial planning versatility and administrative simplicity, offer an attractive complement to other tax planning strategies.
Key Benefits of an Offshore Portfolio Bond
- Simplified Administration
- Reduces some of the fund entry minimums
- Do not necessarily need to sell asset to transfer in to the account
- Client has Total Control
- Confidentiality & Political Stability
- Tax Efficient
- Simplified World-wide Dealing
- Anti-Money Laundering is conducted on the account, so switching between assets remains quick and efficient
- Substantial corporate discounts on any initial entry charges
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