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Non UK Residents Offshore Bonds

Some Offshore Investment Bond providers can offer their products globally to non UK residents. Our “Research and Buy” module can show you which providers will accept business for those residing outside of the UK – simply click on the “Product Features” tab and view the column “UK Residents only?”.

For those residing outside of the UK who decide to take out an offshore investment bond, it is essential to consider the taxation regulations in the country they are residing in because when you surrender the offshore investment bond, any potential tax charge is dependent on your country of residence. It is also essential to check what levels of investor protection are available locally since these safeguards vary considerably. Those currently residing in the UK who plan on emigrating should take advice about the local regulations of the country they are moving to.

If the bondholder becomes UK resident at the time the offshore investment bond is encashed, they can gain tax relief for the period of time they were resident overseas with “Time Apportionment Relief”. This involves reducing the chargeable gain by the amount of time spent residing outside the UK. So if a bondholder had a chargeable gain of £20,000 and had resided outside of the UK for half the time the bond was in force, the taxable gain would be reduced proportionately, to £10,000. It should be noted that periods spent outside of the UK also reduce available “top slicing” relief.

Prohibited Countries

It is important to note that the Offshore Investment Bond providers have a list of prohibited countries. These are countries where the Life Office will refuse to accept an application if you reside there. There are two main reasons as to why a country is included in the prohibited country list. It could be that the country has its own regulations which do not permit a foreign product provider to write business there. Alternatively it could be that the country is listed by the Office of Foreign Assets Control, which is an office of the US Treasury and imposes security and other controls on international transactions from certain countries. This list changes over time as countries are added or removed from it.

Regulation of Offshore Investment Bonds

If the bondholder is resident outside of the UK and the advice is given by a UK regulated company then this advice is regulated by the UK Financial Conduct Authority. The FCA’s suitability requirements relate to the provision of advice to clients, wherever they may be located.

It is unlikely the advice will be covered by the company’s Professional Indemnity Insurance because most policies exclude claims brought outside the United Kingdom or arising from any act or omission done outside the United Kingdom or any proceedings for the enforcement of any judgment or award made outside the United Kingdom.