More advisers to recommend offshore bonds: research

More than a third of UK advisers say they are more likely to recommend offshore bonds as a result of the government’s reduction of pension contribution limits, according to a survey by offshore bond provider Canada Life.

Thirty-six per cent of advisers said the new rules, which come into effect in April, and apply to annual and lifetime limits, would encourage them to increase their use of offshore bonds, compared with just 3% who said they would recommend them less.

The results come after years of significant decline in the sale of offshore bonds.

Almost a third of the advisers surveyed said offshore bonds currently play an “important role” in the advice they give.

The top factor advisers consider when recommending offshore bonds is the potential tax benefit to their client (70%), followed by the cost of the product (56%) and the client’s investment objectives (54%).

More than a quarter (28%) of advisers would base their decision at least in part on the specific offshore jurisdiction of the product. The Isle of Man came top (57%), followed by Ireland (24%) and Jersey (7%).

The most common reason for recommending an offshore bond is related to inheritance tax planning (51%). This is closely followed by the deferred taxation benefits that are useful for income tax planning (48%).

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