Inheritance Tax planning considerations OBIs can also play a role in Inheritance Tax (IHT) planning. A key benefit of both onshore and offshore bonds is that gifting an offshore bond does not trigger an immediate Capital Gains Tax (CGT) liability. The transfer is treated as a gift of a life policy rather than a disposal of individual investments. This can provide flexibility for wealth transfer strategies, particularly for those seeking to pass on assets during their lifetime without crystallising CGT. The gift is still treated as a Potentially Exempt Transfer (PET) and only outside of an individual’s estate after 7 years. Whilst this can be efficient for IHT purposes, the recipient of the gift would be subject to income tax and capital gains tax when drawing from the bond in the future. So it’s important to consider the overall position and seek advice before making such a gift.
Planning considerations in light of potential CGT rises Given the recent increases to the CGT rate announced in the Autumn Budget, individuals with significant investment holdings should make it a priority to review their structures. Offshore bonds can allow tax deferral and, in some cases, a lower effective tax rate when gains are ultimately realised. And for those considering a move overseas, structuring investments through an OIB before departure could help manage your long-term tax exposure. So, if you’re considering a move abroad—or a return to the UK—seeking professional advice on how OIBs fit into your broader tax strategy is essential. By discussing your individual circumstances with an experienced adviser, you can then decide if an OIB is the right investment vehicle for you.
To speak to David or one of the team, call us on 0330 058 6559 or email hello@scruttonbland.co.uk
PRIVATE CLIENT | SCRUTTON BLAND | 7
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