Offshore bonds and other foreign policies
Produced in partnership with Simon Gorbutt
Offshore bonds and other foreign policies

The following Private Client guidance note Produced in partnership with Simon Gorbutt 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

FORTHCOMING CHANGE: Section 36 of Finance Bill 2019–21 sets out draft changes to the calculation of top-slicing relief such that a taxpayer’s personal allowance is recalculated for the purposes of the relief. This may mean that, in calculating the top-sliced gain, the taxpayer can benefit from the personal allowance in circumstances where it would have been lost due to the addition of the policy gain to income of that tax year. It is also clarified that for the purposes of top-slicing relief, reliefs and allowances must be set off as far as possible against other income in preference to the gain. Subject to an exception in respect of gains arising prior to 11 March 2020, the changes would apply from the 2019–20 tax year.

See TIIN: Changes to Top Slicing Relief on life insurance policy gains from 11 March 2020.

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