Offshore Bonds ...
What is offshore investing?
Offshore investing generally means investing in a low-tax jurisdiction which is not your country of residence. The investment fund is taxed at a lower (or zero) tax rate. You can therefore enjoy greater potential returns than a fund whose income and gains are subject to tax (although this will depend on your individual tax position when you cash in all or part of the investment).
What is an offshore bond?
An offshore bond can be a single premium whole of life insurance policy which benefits from being invested offshore. 'Single premium' means that the investment is started with a lump sum. 'Whole of life' means that the policy will continue in existence untill the death of the last life assured (unless previously surrendered). An 'assurance policy' is a contract between a life assurance company and a person which provides for the payment by the company of a sum of money on the death of a 'life assured'.
Alternatively a capital redemption bond could be used. This has no lives assured, only policy holders - this can be useful for trustees - Each policy has a term usually of 99 years.
What's the appeal?
There is a wide array of investment vehicles to choose from in the UK; but as tax breaks have been taken away by governments over the years, many investments have become less efficient, offering little advantage to investors. As a result, offshore investing has become more popular, and offshore bonds in particular have become more attractive.