Prudential Investment Bond- advice please

dunstonh

If so what would be the point in using a wrapper which is subject to 20% internal corporation tax and additional charges on top?

Since when is an offshore bond subject to 20% internal corporation tax?

EdInvestor

dunstonh wrote: »

Since when is an offshore bond subject to 20% internal corporation tax?

Oh it's an offshore, had missed that.In that case it's even easier - the offshore bond is taxed in the same way as an ordinary cash account at the taxpayer's personal rate.

So he would lose out as the charges will be on top.As he has already mentioned.

Comparison of taxes on offshore and onshore investment bonds for those interested.

dunstonh

Oh it's an offshore, had missed that.In that case it's even easier - the offshore bond is taxed in the same way as an ordinary cash account at the taxpayer's personal rate.

Understand you missed it as the thread title is misleading now for the topics being discussed.

However, you are wrong about the taxation on the interest. Its tax free within the investment and becomes chargeable to tax when a chargeable event occurs. This in effect defers the the tax until later but does allow gross roll up. It would have to be part invested to ensure it does not get classed incorrectly.

So he would lose out as the charges will be on top.As he has already mentioned.

With the sum involved an offshore bond does seem a little unattractive as the gains would be wiped out by the charges. Charges that typically remain the same for £1 million or £100,000. Offshore bonds are more attractive with larger sums involved. However, the onshore bond, whilst not as tax efficient, wouldnt have as high charges. At least in the guise of the Prufund that has been mentioned already or other lower cost options.