The major drive by HMRC for overseas assets means “hundreds of millions of pounds” have the potential to be looked by financial advisers who, through careful planning, can save clients thousands in tax.
Once assets become regularised, clients have to start reporting on the assets every year in their tax return and pay tax on an arising basis.
Advising clients on restructuring their overseas assets, for example, into an offshore bond wrapper, can help mitigate or reduce the tax and reporting burden ensuring the assets become more efficient to manage, Skandia said.
The next step is to mitigate any tax exposure and to help protect the client’s assets for their beneficiaries.
Skandia pointed out that although clients often believe that money held offshore will not fall into the UK IHT net, this is not correct.
It explained that assets held offshore have always been subject to IHT but “not necessarily visible to the UK authorities and hence not always disclosed”.
Trusts can also ensure the right people get the right proportion of assets at the right time, helping with succession planning, and can enable funds to be paid out on death without any delay as the need for probate is removed.
Steve Lawless, global head of banking distribution at Skandia, said: “Restructuring assets into an offshore bond can give the client greater control over the nature and timing of any tax payments and putting the offshore bond within a trust wrapper will then help mitigate any IHT liability.”
The Royal Skandia Trust Company is offering advisers access to professional trustee services free of charge for a limited time only, from 1 October to 31 March 2014 for all new Royal Skandia bond applications with premiums of £200,000 or more.
To read about HMRC’s tax haul jumping by 40%, click here.
