Offshore bonds and other foreign policies—further topics

Produced in partnership with Simon Gorbutt

The following Private Client practice note produced in partnership with Simon Gorbutt provides comprehensive and up to date legal information covering:

Offshore bonds and other foreign policies—further topics
Cluster (or segmented) policies
Risks and reversals
Calculation of gains
Personal portfolio bonds
Legislative reform
Offshore bonds and the remittance basis
Offshore bonds and temporary non-residence
Older policies
Policy taken out with non-UK company

More...

Policy taken out with a UK company when overseas
Earlier policies: to vary or not to vary?

The Offshore bonds and other foreign policies Practice Note discusses what is meant by an offshore bond and a foreign policy and it explains the tax charges likely to arise.

This Practice Note covers several more specialised areas: cluster policies (also referred to as segmented policies), personal portfolio bonds (PPBs), the treatment of some older policies and the interaction between the foreign policy rules and the remittance basis and temporary non-residence rules.

Cluster (or segmented) policies

Rather than issuing a single insurance policy, some insurers will issue a series of policies to each policyholder, often referred to as a 'cluster' or 'umbrella' of smaller ‘segments’. Each policy or segment is an insurance contract in its own right. At the outset all segments are identical. They may also have the same number, apart from a sub-designation. For example, the cluster may be numbered XP234567/1-100, where numbers 1-100 identify the individual segments. The insurer might only issue a single policy document for all segments.

UK insurers can usually issue cluster policies, and offshore bonds are frequently sold in this form. However, not all policies offered have this feature. This is a particularly important consideration when advising clients arriving in the UK with policies acquired in another country. For example, a non-UK insurer issuing a policy to a Spanish resident may have no reason to issue a cluster policy as opposed

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