Why in-specie life bond transfers are too often overlooked

By Norrie Little, head of propositions, Hansard International.

Added 6th September 2016

International portfolio bonds and in-specie transfers can be hugely beneficial to those who have worked abroad for multiple companies and have amassed a collection of international shareholdings, says Norrie Little, head of propositions for Hansard International.

Why in-specie life bond transfers are too often overlooked

More and more international companies are now recognising that rewarding their employees with shares in their business can lead to improved productivity and profitability.

This means the number of existing and prospective clients an adviser has with shareholdings is continuing to rise. Similarly, shares are often also acquired as employees benefit from the generous terms that save as you earn schemes offer.

With expatriate employees being more transient than ever before, multiple shareholdings, from employers both past and present, can quickly amass. These shares are usually held in nominee accounts and custodians can be scattered across the globe.

Market moves

Most, if not all, advisers reading this will be familiar with the benefits of investing in an international Personal Portfolio Bond (PPB), with tax efficiency and investment choice being key advantages.

Another often overlooked benefit, however, is the ability to undertake an in-specie transfer to move such shareholdings – subject to them being acceptable assets – into an international PPB. This enables clients and/or their advisers to actively manage their investment portfolios in one place.

Shares and other assets transferred in-specie must be permissible assets and acceptable to the international PPB provider. International PPB providers will all be happy to confirm their asset acceptance criteria on request.

Typically, shares will be deemed acceptable if they are traded on a recognised stock exchange – in a currency the international PPB provider accepts – where market trading/dealing of the shares is active.

An in-specie transfer avoids any sale and repurchase costs, including the payment of any tax or duty that may become payable, and ensures the client remains invested throughout, thereby avoiding any unnecessary out-of-market exposure.

Stamp collection

As an example, for UK residents purchasing UK shares electronically, Stamp Duty Reserve Tax (SDRT) is taken automatically when shares are purchased. SDRT is currently charged at 0.5%. For certificated shares, stamp duty is payable on purchases over the value of £1,000 and is also charged at 0.5% – rounded up to the nearest £5. Shares transferred in-specie into an international PPB on the other hand, are not subject to either SDRT or Stamp Duty.

As most shares are held electronically, transferring ownership to the international PPB provider could not be easier, with the better international PPB providers levying a small charge for doing so, while also providing support and assistance as required.

Inside the International Adviser - September 2016 Issue

International Adviser - September 2016

The September issue of International Adviser magazine is now available to read online. View your digital edition by clicking on the link below, or download the free International Adviser App through your app store.

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Inside the latest edition:

  • Phil Neilson is showing the way forward in Asia with his fintech IFA business
  • Tips on ways to boost the client experience
  • Two reasons why Hansard Global is ‘unusual’
  • High profile fund manager Jason Pidcock’s take on income opportunities for yield hungry investors

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