Malcolm Finney outlines the tax treatment of offshore life policies.
Offshore life policies (OLPs) are often also referred to as offshore bonds. Such policies are policies issued by offshore life companies.
However, in reality these policies are, in essence, investment products with only a small element of life insurance (hence why such policies are non-qualifying). Typically, the policies are single premium policies with the premium paid up-front.
Gains not subject to capital gains tax
OLPs are not chargeable assets and do not give rise to chargeable gains (TCGA 1992, s 210) on the underlying investments comprised in the policy, a major attraction.
Instead, a separate chargeable event regime (ITTOIA 2005, Pt 4, Ch 9) governs the income tax treatment of OLPs, both offshore and onshore, on gains arising on so-called chargeable events
