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Offshore opportunity

Paul Scaff’s letter about investment bonds is interesting but, as so many people do, he only seems to be interested in capital gains tax.

For many people, the rate of CGT has only been 10 per cent if you take into account taper relief which has now gone so that means an increase of 8 per cent once allowances have been taken into account.

But the most important thing regarding bonds, of course, is income and not CGT. For example, to take an offshore bond in fixed interest and cash deposits, it is possible for a 40 per cent taxpayer to draw 5 per cent a year with deferred tax which could be very attractive invested in other vehicles.

The only tax within an offshore bond is a small amount of withholding, not the one that is applicable to insurance companies onshore.

There are, therefore, vast opportunities in this market, particularly if advisers take only a small amount of commission. If you also take into account reassignation and so on, I think for many people an offshore bond is absolutely a no-brainer and I get rather depressed when a lot of erudite people seem to miss this important point.

Of course, there is still top-slicing under ICTA 1988 which Brown and his cohort Darling have not yet seen fit to repeal. I wonder why?

BGW Jamieson
Principal
Jamieson Financial Management
Bognor Regis
West Sussex

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