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With the latest HMRC campaign aimed at targeting investors with overseas assets, some investors could be worried about the impact this could have on their overseas investments, and others could be put off from investing overseas altogether. However, it’s not all doom and gloom, once assets have been appropriately disclosed there are ways in which the investments can be restructured, or new investments made, to make them more efficient going forwards.

There has been a genuine market available for people to invest overseas for many years, and people should not be discouraged from this method of investing in the fear that it is somehow not above board. Providing assets are disclosed accordingly (and for new investors the investment will likely be coming from an already disclosed source), there are many ways in which assets can be structured to minimise the administrative burden and tax liability.   

Once assets are disclosed, they become visible to the UK authorities and investors will need to start reporting on the assets every year via their tax return. Tax will have to be paid on an arising basis, therefore any proposed active management by the investor will lead to more onerous tax reporting via self-assessment as investment decisions will need to be balanced with tax considerations.  

This particular tax and reporting scenario can be delayed if the assets are restructured into a single premium offshore bond. Once the assets are held within the offshore bond, the investor gains much greater control over the timing and nature of any events that are chargeable to tax. All taxes are deferred within the structure (except for any withholding taxes that cannot be reclaimed on income or dividends received), and only on a planned encashment would a tax situation arise. 

Investors are then able to use the advantages the offshore bond brings to manage any tax events, by using features that work uniquely well for offshore bonds, such as: assignment, change of tax residence, and top slicing. However, the biggest area which many investors may see a tax advantage is with regards to inheritance tax (IHT) planning. 

Investors often believe that money held offshore will not fall into the UK IHT net, however, this is not correct. Whilst assets held offshore have always been subject to IHT, these assets were not necessarily visible to the UK authorities and hence not always disclosed.  All this is now changing as new disclosure requirements take hold. These assets will become visible and completely open to scrutiny by the UK tax authorities. 

This could severely impact estate planning for some investors as UK IHT is set at a substantial flat rate of 40%.  Placing an offshore bond into a trust can help reduce this IHT liability and help with estate planning and tax mitigation. Trusts can also ensure the right people get the right proportion of assets at the right time, helping with succession planning, and can enable funds to be paid out on death without any delay as the need for probate is removed.


Steve Lawless, global head of banking distribution, comments:

“HMRC has been taking steps towards disclosure of overseas assets for a while now, and this latest campaign is targeting those who haven’t yet taken any action. Investors should not delay in disclosing their assets, and should seek advice on what action they can take to restructure their investments once they have been disclosed. The offshore bond structure is not a tool to avoid tax but offers investors greater control over the timing and nature of the tax payable.  It also greatly lightens the burden of reporting on active management within such accounts.”


For more information contact

Sophie LentonOld Mutual Wealth02380 916 77007834 499 558
Amelie ShepherdOld Mutual Wealth02380 916 09107834 499 596

Notes to editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £118.1 billion in customer investments (as at 30 September 2018).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Quilter Private Client Advisers; discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.

The Quilter plc businesses are being re-branded to Quilter over a period of approximately two years:

• The Multi-asset business is now Quilter Investors

• Intrinsic to Quilter Financial Planning

• The private client advisers business is now Quilter Private Client Advisers

• The UK Platform to Quilter Wealth Solutions

• The International business to Quilter International

• The Heritage life assurance business to Quilter Life Assurance

• Quilter Cheviot will retain its name

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.