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The Portfolio Account launched today by  Prudential International
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Bonds
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Saving for retirement, organising our finances to escape inheritance tax and making the most of our hard-earned cash are at the top of the list of many expatriates and offshore investors. Finance4expats.com looks at how you can benefit from offshore bonds.
Offshore bonds are usually offered by the subsidiaries of UK Life Companies and are typically run from Luxembourg, Isla of Man and the Channel Islands, with the main advantage being that they grow free of UK tax.
Theoretically, anyone can invest in offshore bonds and tend to be far more flexible that a qualifying pension product, for example you can have access to the funds before the age of 55.
Offshore bonds can be very useful for people who are wealthy and have already exhausted other tax-efficient savings vehicles, such as pensions and individual savings accounts.
They can work well for flexible retirement saving as your money grows, essentially, tax-free. Tax deferment is the key benefit for investors in offshore bonds and potential investors therefore need to take a view on what their tax position is likely to be when they eventually want to cash in their investment.
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With rising house prices and growing personal wealth, more and more people are turning to offshore bonds as part of their inheritance tax planning.
According to the latest report from Defaqto, the leading financial products research company said that the market grew by almost 50 per cent to £7.4 billion in 2006, after a 60 per cent rise in 2005, and this despite uncertainty over estate planning and trust legislation.
Continued outward migration, international portability and tax advantages are contributing to sales growth, while a further boost is expected to come from the HMRC’s crackdown on tax evasion. This will encourage people to move offshore assets into more transparently legitimate investments. |
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Investors with sums over £100,000 at their disposal, scouring the
market for possible savings options, can now access an offshore
investment negotiated by a team of financial experts with years of
experience in the Isle of Man offshore market.
Although
offshore bank accounts have recently lost some of their allure for
investors, Chartwell Finance Management, have used their extensive
know-how to create an option presenting an opportunity to benefit from
high interest rates and also defer tax.
They can now offer a new
ground-breaking Bond giving investors a high rate of interest together
with all the benefits of gross roll up that comes with saving offshore
and without the financially unappealing charges typically associated
with such investment vehicles. |
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Band of Scotland International (BOSI) has launched a new Bond which taps into the FTSE 100 Index, allowing investors to benefit from any growth or fall on their capital investment.
Once the five year investment term is up, investors will receive either 80 per cent of the average percentage rate increase or decrease of the FTSE 100 or a total return of 10 per cent gross regardless of the FTSE performance – whichever is greater – as well as their initial investment back. |
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Scarborough Channel Islands Limited (SCIL) has launched a two-year offshore Bond at a rate of 6.30 per cent. 29 May 2007
SCIL, the offshore subsidiary of Scarborough Building Society, is making the product available with a minimum opening balance of £5,000, up to a maximum of £1,000,000. Once the account has been opened, no more deposits or withdrawals can be made. Interest can be taken at an annual rate of 6.30 per cent or at a monthly rate of 6.10 per cent.
Robin Litten, spokesperson for SCIL, said, ‘We hope the new Bond will appeal to investors looking to lock into a high guaranteed rate until 2009.’
SCIL joined Scarborough’s suite of subsidiary businesses in April, bringing with it a deposit book of £600 million and approximately 6,000 customers.
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The rapid growth and development of Islamic finance is seeing a variety of products released in accordance with Shariah law.With Islamic mortgages and savings accounts booming, the latest development to hit the market are Sukuk is the Arabic term for a financial certificate, although it can also be viewed as the Islamic equivalent of a Bond.
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