Protect your offshore assets
HM Customs & Excise is clamping down on UK residents who use offshore tax havens as hiding places for their assets. So how do you keep your money safe?
"Offshore account holders are under attack," says Elizabeth Colman in The Times. HM Customs & Excise is clamping down on UK residents who use offshore "tax havens" (including Jersey, Guernsey, and the Cayman Islands) as hiding places for assets. Holding assets offshore is perfectly legal. But anyone whose "permanent legal home" or "domicile" is Britain, and who is also classed as a "UK resident" for tax purposes (usually because they spend more than half of each tax year here for work) must still pay UK tax on any income or capital gains generated offshore, regardless of whether or not the funds are "remitted back" to Britain.
However, HMCE relies heavily on individuals voluntarily disclosing their offshore assets. That's because several offshore jurisdictions have refused to share client details with overseas tax authorities. So HMCE's latest initiatives, says MoneyMarketing.co.uk, include seeking legal notices to force around 25 foreign banks to disclose information about clients with offshore accounts. Anyone shown to have lied about such assets on previous tax returns could face substantial penalties, or even prosecution.
Of the legitimate offshore schemes for British taxpayers, the offshore bond is among the more useful. These bonds are a wrapper set up by a UK insurance firm in which you can hold a variety of investment funds, or even cash. The objective isn't tax avoidance but rather tax deferral. This is useful for higher-rate taxpayers who may be nearing retirement, and who either expect to pay a lower rate of tax on their pension income in Britain, or perhaps plan to retire to a country with a lower tax rate than the UK.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The bonds allow the fund manager to roll up investment gains largely tax free (withholding taxes are levied on dividend income) and permit an investor to withdraw up to 5% of the invested capital each year tax-free; the tax only falls due when the bond is cashed in. But fees can be steep 8% in some cases and minimum subscriptions are typically £10,000, so take advice before diving in.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
-
Best-performing funds and investment trusts in stocks and shares ISAs of all time
As ISAs celebrate their 26th birthday, we reveal the best-performing funds and investment trusts since stocks and shares ISAs launched in April 1999, and how much they would be worth today
By Ruth Emery Published
-
Dividends: Reliability in uncertain times
Dividends have formed over half of the total return of the UK market over the last 20 years. Dividend strategies have been under-appreciated while investors have focused on US mega cap technology. Income strategies may have more appeal in a tougher investment climate
By MoneyWeek Published