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Revenue tax switch gives boost to offshore bonds

The Inland Revenue&#39s decision to change the way offshore bonds are taxed makes them more attractive than onshore bonds, says Scottish Life International.

The claim follows the Revenue&#39s disagreement with Eurolife&#39s interpretation of tax rules, requiring tax on high-income bonds be levied on an income tax basis rather than a capital gains tax basis.

Taxing on an income basis means investors will miss out on two CGT advantages – use of indexation relief and the deferring of payment of tax until the maturity of the product –which SLI says would result in a bigger tax bill overall.

Marketing director John Allison says: “Investors in a number of onshore products will be adversely affected if the Revenue succeeds in securing the reinterpretation of the way in which high-income bonds are taxed. This is yet another reason to opt for an offshore rather than an onshore bond.

“If the Inland Revenue succeeds someone will have to pay. The company will have to either take the tax hit or pass the cost on to the investors.”

Last month, Eurolife had to slash its payouts on high-income bonds when the FSA told it to set aside additional reserves in case the Revenue&#39s decision is not overturned.

Jackson Batten Financial Group managing director Robert Rackliffe says: “If you are a non-UK resident for tax, then investing offshore would be good if you are looking for capital growth but not if you are looking for income. If you are susceptible to UK income tax then it will not make a huge difference in the long run.”


Self-cert mortgage in the Pink

Pink Home Loans has introduced the exclusive self-cert mortgage.Aimed at self-employed people who have had trouble getting a mortgage in the past because of difficulties in proving their income, it has a discount of 2.65 per cent for the first six months of the mortgage, giving it a payable rate of 3.98 per cent for […]

Moore&#39s code

Looking at the Government&#39s record, like it or not, historians are likely to see Gordon Brown as one of this country&#39s greatest chancellors in terms of economic stewardship. But the stable, low interest rate environment he and Bank of England governor Eddie George have created comes at a price, as those who save as opposed […]

Horlick condemns star fund manager culture

SG Asset Management foun-der Nicola Horlick denounced the star fund manager culture this week, claiming a fund&#39s performance can never be attributed to an individual. In an exclusive interview with Money Marketing, SGAM joint managing director Hor-lick said increasingly sophisticated markets make it impossible for one person to be responsible for a fund. She said […]

Collins Stewart goes for absolute return

Mullin says: “Not a well known product provider. Offshore does not appeal to investors generally. It may appear overly complicated at first glance, and there is no history of performance and investment.”On the subject of the flexibility offered by the fund, Hosking says: “There is some flexibility with the broad range of asset allocation and […]


Employer iPMI responsibilities could continue to escalate, says Jelf

New laws in Dubai will put the burden of providing international private medical insurance (iPMI) firmly on the shoulders of the employer in order to maintain the country’s leading healthcare facilities. With 10,000 UK nationals having moved to the country since 2007 and only 16.5 per cent of the total 8.2 million people living there being Emiratis, Jelf Employee Benefits believes this move was inevitable and employer responsibilities could continue to escalate in future.


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