ARTICLE · 06 JANUARY 2012

Offshore Investment Bonds

Smith & Williamson

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An offshore investment bond can be an attractive wrapper through which to hold your investments due to the tax deferral opportunity provided, particularly in view of the penal tax environment for higher earners.

United KingdomTax

An offshore investment bond can be an attractive wrapper through which to hold your investments due to the tax deferral opportunity provided, particularly in view of the penal tax environment for higher earners.

From April 2011, individuals with UK taxable income between £100,000 and £114,950 are subject to an effective tax rate of 60%, while those with UK taxable income over £150,000 are subject to a top rate of income tax of 50%. Investment bonds can offer tax deferral opportunities where income is drawn.

An investment bond is a non-qualifying single premium whole of life policy, designed to provide growth or income on a lump sum investment. A single payment is made into the bond which can be invested in either a discretionary collectives portfolio, with a fund manager of the investor's choice, or in a range of the bond provider's own funds or externally managed funds.

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