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Pru targets UK expats with tax-efficient offshore bond

Prudential International is offering a new single-premium offshore portfolio bond.

The Portfolio Account is a tax-efficient open architecture offshore bond that gives advisers access to more than 2,000 funds from different fund managers.

The bond has four charging options and requires a minimum £50,000 investment. It allows 20 free fund switches in the first year and 10 in subsequent years.

The launch follows the company strengthening its technical support team with the recruitment last year of Scottish Life International’s technical manager Gerry Brown.

Head of development for Prudential International Richard Leeson says the bond is aimed at expatriates and UK clients looking at moving abroad, the IHT planning market and clients with general tax-planning needs.

Leeson says: “The Portfolio Account brings together for the first time factory gate-pricing and an almost unlimited range of collective investments from markets across the world and will provide an alternative for investors who might have looked at fund supermarkets or wraps in the past.”

He adds that the bond has significant tax benefits, with the only liability being the withholding tax levied on dividend income from some fund assets. Investors do not pay income tax on their investment profit until money is taken out of the bond.

Leeson says 5 per cent of the original investment can still be withdrawn each year without an immediate tax payment. If part of the investment is switched from one fund to another, there is no capital gains tax liability on any profit made on the switch.

Of the estimated £8bn-£8.5bn offshore investment sales recorded last year, around 90 per cent of business was in portfolio bonds, says Leeson. He adds that Prudential’s offshore sales this year have been up significantly on the first quarter of last year.

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