ARTICLE · 16 APRIL 2007

Channelling Funds

Smith & Williamson

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We examine the advantages of offshore bonds in income and IHT planning. Investors in the stock market tend to use direct equities, unit trust funds or openended investment companies (OEICs) as tax-efficient vehicles for income and IHT planning.

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We examine the advantages of offshore bonds in income and IHT planning.

Investors in the stock market tend to use direct equities, unit trust funds or open-ended investment companies (OEICs) as tax-efficient vehicles for income and IHT planning.

Any capital gains that they make are liable to capital gains tax, subject to taper relief and their annual exemption. If the assets are transferred to anyone other than their spouse or a trust, the capital gains are crystallised immediately and tax may become payable. Having said this, capital gains tax vanishes at death, leaving only IHT to pay.

Dividends received from such investments are subject to tax at the individual’s marginal rate, although credit is given for withholding taxes.

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