Couple have £1.2million in Iceland (IofM branch/not protected)

dunstonh

The offshore investment bond has little tax benefit to UK taxpayers unless you hold it long term and use the process of deferral and gross roll up.

The bond itself is just a tax wrapper and you can invest in an almost unlimited range of investments as well as institutional deposits. Normally you diversify heavily in offshore bonds. That isnt just hindsight talking but common sense and diversification is the norm. So, either they have other deposits and funds in the bond or they may have a case against the adviser.

I suspect they have a lot of other funds as well as you wouldnt put money for a short term bill into an offshore bond (like their CGT bill) as the taxation method on the bond would make that totally inappropriate (the withdrawal would be treated as a gain for tax purposes).

The main reason for using an offshore bond as a UK taxpayer is to avoid or reduce paying tax. It is not tax free as you need to manage the investment to get it to work tax efficiently. With careful management you could avoid lots of tax.

Offshore investments are not covered by the FSCS scheme. The offshore providers do not pay towards the FSCS scheme. It has nothing to do with residential status. The FSA authorised firms and individuals pay levies to fund the FSCS. Offshore firms do not. Hence why the FSCS is not paying out.

whiteflag_3

[

quote=dunstonh;15166385]The offshore investment bond has little tax benefit to UK taxpayers unless you hold it long term and use the process of deferral and gross roll up.

But arent all investment bonds meant to be long term ?

Offshore investments are not covered by the FSCS scheme. The offshore providers do not pay towards the FSCS scheme. It has nothing to do with residential status. The FSA authorised firms and individuals pay levies to fund the FSCS. Offshore firms do not. Hence why the FSCS is not paying

Dh when you are talking about offshore investments and offshore investment bonds are you talking about the same thing?

If you are, then what you say is not true.

Someone "investing"( non bank accounts) in an offshore bond while habitually resident in the UK is covered by the FSCS - ie 100% first £2000 and 90% of the rest.

ad44downey

I've more sympathy for people living in cardboard boxes, etc.

dunstonh

But arent all investment bonds meant to be long term ?

Correct. but even more so with offshore bonds due to the taxation. Partial chargeable events in the short term make the offshore bond very inefficient.

Dh when you are talking about offshore investments and offshore investment bonds are you talking about the same thing?

If you are, then what you say is not true.

Someone "investing"( non bank accounts) in an offshore bond while habitually resident in the UK is covered by the FSCS - ie 100% first £2000 and 90% of the rest.

I was working on the basis that they used the Royal Skandia bond which is not protected under the FSCS but under the Isle of Man scheme