Merryn Talks Money Offshore Bonds: What They Are and Who They’re For
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Nov 19, 2025 Paula Steele, a seasoned financial adviser with over 40 years of experience, dives deep into offshore bonds. She explains their function as life insurance wrappers and compares them to ISAs and pensions, highlighting key tax benefits. Gain insights on the 5% withdrawal rule, potential tax liabilities, and when offshore bonds become beneficial for long-term planning. Paula also discusses the implications of moving abroad and innovative strategies like the gift and loan scheme. Get ready to rethink how you manage your wealth!
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What An Offshore Bond Actually Is
- An offshore bond is a life insurance policy that mainly acts as an investment wrapper with minimal life cover.
- It shelters income and gains from tax while money is inside but not on the way in or out.
How Wrappers Differ
- Offshore bonds, ISAs and pensions all let funds accumulate without UK income or capital gains tax inside the wrapper.
- The key difference lies in tax treatment on contributions and withdrawals across the three wrappers.
Use The 5% Annual Withdrawal Carefully
- Use the 5% allowance to withdraw up to 5% of original capital each year to defer tax on gains.
- Avoid taking more than 5% without planning because excess withdrawals trigger income tax on gains.