SLI provides guide on offshore bonds

Scottish Life International has issued a guidance note to help advisers understand the use of offshore bonds.

Aimed at financial advisers in the UK, the Isle of Man-based company says the note explains the tax and investment issues which surround investing in offshore life assurance bonds.

It suggests IFA may be needing to look more towards offshore bonds, particularly if more clients are choosing to work abroad, or if they plan to retire abroad or are “internationally mobile”.

In addition, SLI suggests since A-Day and the introduction of a lifetime limit of £1.5m, which increases to £1.8 by 2010-11, higher-earning clients may be feeling restricted by the pensions limit, and not wanting to incur a 55% tax charge could be looking for alternative tax-efficient savings methods.

The insurer also says offshore bonds could be a viable alternative for these high-net-worth clients, as they are taxed internally in the same way as pensions, so can be useful when helping a client with their retirement planning.

Alan Blackburne, head of UK sales at Scottish Life International, says IFAs want to maximise investment returns in line with their client’s stated financial objectives, and offshore bonds can help do this.

He says this is particularly relevant where the client is “internationally mobile, a resident non-domicile, or potential overseas retirees, where their particular situation will determine the benefits open to them”.

But although offshore bonds could be useful for a number of clients, many advisers are still unsure of exactly they work, so the company says the guidance note will not only offer general information about investing in offshore bonds, but also the tax advantages and flexibility of the investments.

For example, it points out one main advantages of an offshore bond is that part-surrenders can be made when required, which can then be used to meet a client’s need to receive a regular income.

Blackburne adds: “With international mobility on the increase, we now have a more outward-looking population, and this group of clients, whether their stay out of the country is permanent or temporary will need investments to be flexible and portable, and offshore bonds can provide the required level of flexibility and portability.”

Advisers wishing to receive a copy of the guidance note can email Scottish Life International Sales Support or ring 01624 681 531.

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