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Individuals who are resident or ordinarily resident but not domiciled in the UK cannot escape UK income tax on an offshore life policy simply by not remitting the proceeds to the UK. The life policy is not classified as an offshore fund even though it is used as a wrapper.

The Inland Revenue`s Inspector`s manual incorrectly says that for such individuals the remittance basis applies to an offshore life policy gain as it would for capital gains tax purposes under section 12 TCGA 1992 &#34 Foreign assets of person with foreign domicile&#34. However, the Inland Revenue`s assessment procedures manual confirms that the gain is taxed under Schedule D Case VI at the lower, basic or higher rate as appropriate. The basis of taxation under Case VI is on the full amount of the gain arising hence the remittance basis will not apply.


This is a very important point for those advising on offshore policies. Non domicile status offers many UK tax advantages including limitation of IHT to non-UK situs assets only, and the remittance basis for non-UK investment income and gains. Being taxed under Case VI Schedule D however non-UK life policy gains will not qualify and so if an investor considers that the likelihood of encashing a bond to trigger a gain whilst UK resident is high then some thought ought to be given to alternative investments/structures.


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The Government is proposing to subsidise lower earners with top up payments to ensure they remain within their occupational pension schemes.The move is detailed in proposals for the rebate structure under the State Second Pension and follows concern that many of the low paid earning less than £9,500 a year, would be better off opting […]

Size doesn&#39t matter – life office survey

Size doesn&#39t matter when it comes to the growth of insurance firms, according to the Association of British Insurers.According to “Firm Size and Growth in the UK Life Industry” from 31 December 1987 to 31 December 1991 smaller life insurance companies grew the fastest. By 1992-6 the growth rate in companies large and small had […]

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OFT delays RBS bid

The Office of Fair Trading has said it needs more time to examine Royal Bank of Scotland&#39s £25bn bid for National Westminster Bank.The bank&#39s failure to win immediate clearance brings fresh hope for the Bank of Scotland which made a hostile bid for NatWest a couple of months ago.


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