Offshore Bonds: Key Tax and Practical Issues for Individuals & Trustees

By the end of this course, participants will:

• Know what a ‘personalised portfolio bond’ (PPB) is and why they must be avoided
• Understand what offshore bond permitted investments and offshore investment bond taxation or taxation of investment bonds can be held in a non-personalised offshore bond taxation
• Understand the planning opportunities presented by segmentation of bonds when partial encashments of bonds are made for these tax saving bonds
• Know the pros and cons of using an offshore bond as a tax wrapper, including
  • How UK Investment Bonds Top Slicing Relief (TSR tax) can mitigate tax charges
  • How ‘time-apportionment relief’ can reduce charges where the investor has lived abroad
• Understand the impact of the Silver case and the potential for tax repayments going back several years
• Understand the changes to TSR in Finance Act 2020 and how they impact tax liabilities and offshore bond tax payments
• Appreciate how well-timed encashments can produce significant tax charges
• Know that there is only minimal relief (‘deficiency relief’) for losses
• Understand how encashments of bonds by trustees may produce an offshore trust fund tax charge on the settlor, trustees, beneficiary or no-one (depending on the circumstances)
• Understand how ‘gift and loan trust’ and ‘discounted gift trust’ strategies involving trusts can mitigate Bonds Inheritance Tax or offshore bond inheritance tax

• Overview of tax rules on LA bonds, including
  • Comparison with other investment-holding vehicles
  • Holding bonds in segmented form
  • Tax charges on encashment, including
    • ‘Top slicing relief’ on offshore bonds for non-UK residents’
    • Impact on Personal Allowance abatement and High-Income Child Benefit Charge
  • The Silver case
    • How far back can tax repayment claims go?
  • FA 2020 changes to TSR calculations
    • Treatment of personal allowance
    • Allocation of other allowances
  • Finance (No.2) Act 2017 changes to the rules on partial encashments
  • Comparison of the UK and offshore bonds taxation
• ‘Personal portfolio bonds’ (PPBs), personal portfolio bond rules and personal portfolio bond taxation
  • What they are and why they need to be avoided
  • Permitted investments
• ‘Time-apportionment’ relief following periods of non-residence
• Taxation of offshore investment Bonds held in trust
  • Who is liable for any tax charge on encashment?
  • Tax rates applying
  • Practical problems and tax traps
    • Case study on the appropriateness of investment bond in trust for trustees of an interest in possession trust
  • Benefits of an offshore bond, including
    • ‘Gift and loan’ trusts
    • ‘Discounted gift trusts’
  • Losses, including deficiency relief on bonds

The trainer is a Chartered Accountant who qualified with PwC in 1988, spending his last 18 months in the Tax department.

In 1989, he joined a leading financial training company as a tax tutor. Since 1992, he has been self-employed as a Professional Tutor and Training Consultant, specialising in tax treatment of offshore bonds course for accountants, lawyers and investment managers.

This course will introduce delegates to the area of offshore investment bonds tax for trusts and examine the main advantages and tax traps associated with them. It will be helpful to wealth managers, lawyers and accountants who deal with them in practice.

Delegates will be reminded of the main characteristics of tax on investment bonds held in trust and the distinctions between the UK and tax on offshore bonds will be explained. Of particular importance is an understanding of the limits that are placed on the taxation of investment bonds held in trust in order to avoid the nasty anti-avoidance rules covering personal portfolio bonds.

The tax on bonds issues associated with offshore portfolio bonds held by trustees i.e. trustee bonds will also be covered.

The course material will contain plenty of numerical examples to help explain what are often complex tax rules.