Offshore bonds and other foreign policies
Produced in partnership with Simon Gorbutt of Lombard International Assurance
Offshore bonds and other foreign policies

The following Private Client guidance note Produced in partnership with Simon Gorbutt of Lombard International Assurance provides comprehensive and up to date legal information covering:

  • Offshore bonds and other foreign policies
  • What is a bond?
  • What is an offshore bond?
  • Foreign policies
  • Qualifying policies
  • Chargeable event gains
  • Circumstances in which no chargeable event occurs
  • Relief for periods of non-UK residence
  • Example 1: Illustrating adjustments for periods of overseas residence
  • Tax on the gain
  • more

This Practice Note explains what is meant by offshore bonds and foreign policies and the tax charges that are likely to arise.

What is a bond?

The word 'bond' has a number of meanings. In a financial context, the term can refer to government bonds (also known as 'gilts'), and corporate bonds, under the terms of which the investor lends money to the government or to a company, often in exchange for a guaranteed return after a fixed period. For more information on this form of bond, see Investments and advice—Gilts. National Savings Bonds are an example of a type of loan to the government. For more information on National Savings Bonds, see Investments and advice—National Savings.

The term ‘bond’ can also refer to a type of life insurance policy, of which an ‘offshore bond’ is an example.

This Practice Note discusses the taxation of offshore bonds and other foreign life insurance policies. Some more specialist areas are covered in the Offshore bonds and other foreign policies—further topics Practice Note, which describes cluster policies, personal portfolio bonds, the treatment of some older policies and the interaction between offshore bond taxation and the remittance basis.

The taxation of life insurance is complex and these notes are only an outline. In particular, capital redemption policies and policies held in trust are not covered. For