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

• Know what a ‘personal portfolio bond’ (PPB) is and why they must be avoided
• Understand what investments can be held in a non-personalised offshore bond
• Understand the planning opportunities presented by segmentation of bonds when partial encashments are made
• Know the pros and cons of using an offshore bond as a tax wrapper, including
  • How top slicing relief (TSR) 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 on tax liabilities
• Appreciate how apparently well-timed encashments can, in fact, produce large tax charges
• Know that there is only very limited relief (‘deficiency relief’) for losses
• Understand how encashments of bonds by trustees may produce a tax charge on the settlor, trustees or beneficiary (depending on the circumstances)
• Understand how ‘gift and loan’ and ‘discounted gift’ strategies involving trusts can mitigate 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’
    • 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
• ‘Personal portfolio bonds’ (PPBs)
  • What they are and why they need to be avoided
  • Permitted investments
• Comparison of UK and offshore bonds
• ‘Time-apportionment’ relief following periods of non-residence
• 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 an investment bond for trustees of an interest in possession trust
  • Uses of offshore bonds, including
    • ‘Gift and loan’ trusts
    • ‘Discounted gift trusts’
  • Losses, including deficiency relief

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

In 1989 he joined a leading financial training company as a tax tutor, teaching final level candidates for the ICAEW and ACCA examinations. Since 1992, he has been self-employed as a Professional Tutor and Training Consultant, specialising in tax update courses for accountants, lawyers and investment managers.

He has been teaching in the financial services industry since 1994. Although he concentrates on the professional development market these days, he is very experienced in teaching stock brokers, fund managers and financial advisors for their various regulatory examinations.

As a result, he is a tax specialist with (unusually) a very rounded knowledge of financial services products and markets. In 2012 this led to him undertaking Gapfill courses for the CISI.

He is a regular contributor to Taxation magazine and speaks at regional conferences of the ICAEW and CIOT.

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

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

The tax issues associated with bonds held by trustees will also be covered.

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