The Guernsey-domiciled Private Client Account is structured as protected cell company and described by its provider, International Investments & Annuities, as a flexible purchased life annuity.
According to Peter Carnell, who heads sales and marketing for the company, the structure allows for tax-free withdrawals of up to 6.5% annually for the first 15 years that annuity payments are taken.
Between the ages of 80 and 90 this percentage rises incrementally each year from 9.2% to 18% of the initial capital.
This compares favourably with the 5% annual withdrawals available through offshore bonds, which Carnell also described as "tax-deferred" rather than tax-free.
Carnell said other benefits included the product’s use in estate planning, where any residual funds left in the product on the annuitant’s death can be passed to beneficiaries free of IHT. He added the product was equally suited to expats and UK tax residents.
The product has also been popular with those making use of the HMRC’s Liechtenstein Disclosure Facility (LDF), noted Carnell, because it allowed them to continue to hold assets offshore in a tax-efficient structure after they have been brought into the UK tax net.
The backers of International Investments & Annuities are Surrenda-Link, a UK-based purchaser and trader of endowment policies, and Powrie Appleby, a tax advisory firm, also based in the UK.
The product has a minimum £250,000 investment and allows annuities to be made over a fixed period, subject to a minimum of 15 years, or until death. The underlying investments can be managed by a self-appointed discretionary manager or in a range of funds managed by Collins Stewart.
