Although it is becoming increasingly difficult to avoid the taxman with offshore accounts, many Britons are now investing in offshore bonds in order to escape paying new penalizing taxes on pension plans and also it is believed that this will aid in inheritance taxes as well.
One of the UK’s largest insurance companies, L&G, states that its business in offshore bonds increased by almost 50% within just the past quarter. When added to record sales last year, this is quite a considerable increase and clear evidence that wealthier UK investors are seeking a safer haven for their money.
It is reported that one of the biggest reasons for this increase in offshore investments is that the new laws limit the amount which can be saved into annual pensions. With the current freezing of the IHT, Inheritance Tax and an increase in the CGT, Capital Gains Tax, there are increasing numbers of investors are looking for a way to minimise being taxed on their investments. Offshore bonds are seen as the safest haven at the moment for minimizing losses.
Wealthier investors currently have a cap of £50,000 which can be placed into a pension on a yearly basis and this limit is clearly reserved for the wealthiest persons in the UK. According to a Hargreaves Lansdown spokesman, Danny Cox, this limit is actually much more than the average worker can afford so it is the wealthiest who are taking advantage of offshore bonds for their retirement pensions.
Unfortunately, it is no longer possible to completely hide from taxes as shelters once allowed you to do but these offshore accounts are a means to deferment. The benefit here is clear in that deferring taxes whilst making larger sums of money would put off owing as much if the taxpayer expects to make significantly less, or average amounts of income when it is time to cash in the bonds.
You may not be able to avoid the new taxes altogether, but offshore bonds have garnered increased attention simply for the fact that deferring taxes does make it possible to owe less in the end whilst earning more in the interim.
