The Government plans to change the tax treatment of “chargeable gains” on onshore bonds to bring them in line with offshore bonds.
Under current rules investment gains on onshore and offshore bonds are treated differently when an investor moves out of the UK.
For an offshore bond the proportion of any investment gain that is subject to tax is reduced for every year the individual spends abroad. This is not the case for onshore bonds at the moment but will be from April 6 this year.
Skandia head of wealth planning Colin Jelley says: “At the moment if someone takes out an offshore bond and lives abroad for five years, then returns to the UK for five years before cashing it in, only half of the investment gain is taxed because the individual has only been in the UK for half of the duration of the policy.
“This change extends that rule so that onshore bonds get treated in the same way because at the moment with an onshore bond you would be taxed on the full amount even if you have not lived in the UK for the whole time.”