Skandia International has “enhanced” the adviser charging options available on its range of offshore bonds.
The changes mean that the advice fee no longer needs to be deducted from the annual 5 per cent tax-free withdrawal allowance, which leaves more of the allowance for the customer.
For customers who want to use the 5 per cent withdrawal allowance on offshore bonds, they can benefit from greater tax-free income, the firm said.
The changes by the company follow HM Revenue and Customs’ recent confirmation that provided certain conditions are met all advice relating to investments linked to the offshore bond can be considered as advice to the life company, and not to the adviser.
As a result, the advice fee is part of the product and does not impact the annual 5 per cent tax-free withdrawal allowance. However, this only applies where the advice relates specifically to investment advice.
There has been confusion over the changes, after HMRC confirmed to FTAdviser the guidance would apply if the life company receives the advice “directly”, rather than the policyholder. The Financial Conduct Authority later confirmed it would review the guidance.
Previously, Skandia International used the model only on its discretionary asset management service, and is now able to roll it out to all advisers offering investment advice.
Rachael Griffin, head of technical marketing at Skandia said: “This enhancement is fantastic news for customers. It means they have more of the annual 5 per cent tax-free allowance to take as withdrawals.
“We’ve had a great response from advisers to this development as they see this as a real tangible benefit to their customers, and are keen to set up their new offshore bond business in this way.”
