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From Adviser Guide: Offshore Investments

Q. Who should invest in offshore products?

While potentially suitable for a wide range of individuals, those looking to move abroad or to mitigate inheritance tax are likely to benefit most.

By Ashley Wassall | Published Aug 02, 2012 | comments

As many offshore products, and particularly funds, are marketed to investors on the basis of potentially superior returns, in theory they are suitable to a wide range of individuals.

The Investment Management Association began including offshore funds in its sector classifications in April 2010, perhaps reflecting the relatively mainstream nature of many vehicles.

However, that charges and minimum investments are often higher - and tax consideration more complex depending on the funds status or otherwise as a ‘reporting fund’ - means that it is typically more sophisticated high net worth investors that will go offshore.

For bonds the appeal of the ability to defer UK income tax will particularly appeal to those that could see a drop in their marginal tax rate at some point in the future, for example when they retire.

According to Neil Chadwick, technical manager at Royal London 360, offshore investment bonds are also particularly suitable for high net worth individuals “looking to undertake some form of legitimate inheritance tax planning as most life offices can provide suitable trust solutions”.

He added that they can be equally suited to individuals who “may be moving to another country in the future and do not want to suffer UK income tax on an ongoing basis”, or “trustees looking to provide a tax efficient investment for their beneficiaries”.

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