When planning your financial future, there are a few things you should think about to make sure your financial future stays on track.
BENEFITS OF INVESTING OFFSHORE
Investing offshore doesn’t have to be complex. There are many reasons why you might consider investing through an international jurisdiction.
Some people may think it’s complex, but there are many reasons why you might consider investing through an international jurisdiction.
Here are just some of the things you could benefit from when investing with us.
Diversification with wider access of investment choices
With products designed to work across international jurisdictions, our solutions give you access to a wider investment range.
You are no longer restricted to only Hong Kong authorised assets if you invest in our solution that is available to professional investors only. With the gained exposure to investment sectors and assets not catered for by local products, this means you can enjoy significant investment freedom to capture the different growth cycle and market opportunities in a tailor-made portfolio designed according to your financial goals and attitude to risk.
If you live or work overseas, or are thinking of moving abroad in the future, investing through an international jurisdiction may have its benefits. For starters, it gives you the flexibility of a wealth management solution that can adapt and move with you as circumstances change. Remember though that there may be restrictions in certain countries so please check with your appointed adviser.
Tax deferral and tax planning
For many investors, the tax benefits that an offshore investment can provide is an important consideration.
Investments held within our solution can grow virtually free of income tax or capital gains tax. You may still be liable to tax when you withdraw your money, but the impact of tax can be managed over the long term with the expertise of an adviser.
Note: Some underlying funds may be liable to a tax known as withholding tax, which cannot be reclaimed. This tax is deducted at source, for example, from dividend income.
Further tax benefits for UK investors
You can withdraw up to 5% of your initial investment free of income tax each year and defer tax payable until you have withdrawn your total investment or surrendered your investment.
Our UK compliant investment solution is classed as ‘non-income producing assets’ by HM Revenue & Customs. This means there is normally no requirement to include details on self-assessment tax returns unless you decide to:
- cash in more than 5% of your initial investment in any one tax year, or
- surrender your policy.
Your adviser can help you explore a number of potential ways of mitigating any inheritance tax (IHT) or other tax liabilities.
Speak to your appointed adviser to explore more how you might benefit from investing offshore with Utmost International.
INTERNATIONAL WEALTH AND TAX IMPLICATIONS
The foreign stock markets have always been an attractive investment. You may hold some international assets directly, but are you aware of the potential tax implications?
Offshore investing has become more popular in recent years as investors have become more internationally mobile.
Some people purchase overseas properties, while others invest in foreign stock markets through offshore banks and offshore securities platforms. These assets are known as ‘situs assets’ – assets that are based in a different geographical location to where the investor is resident or domiciled. However, even if you reside in Hong Kong, you could still be subject to tax if you are holding these offshore investments directly across multiple jurisdictions. For example, UK inheritance tax (IHT) and United States Estate Tax are assessable on situs assets regardless of whether the owner of the asset is resident or domiciled in the UK or the US.
Instead of holding the assets directly, an alternative is to hold the assets within our solution. When investments are transferred to our offshore insurance policy (subject to our acceptance), we become the legal and beneficial owner of the assets*, and therefore on your death, the value of the assets are not assessable to estate tax.
Also, as Utmost International Isle of Man Limited is based in the Isle of Man, investments can grow virtually tax-free within our policies. Funds linked to our policies are not liable to income tax, capital gains tax or corporation tax. This means there will be more investment returns to compound over time and you could potentially enjoy higher long-term returns.
Speak to your appointed adviser to find out more about how our offshore insurance policy could help you achieve tax efficiency and other additional benefits.
*Upon completion of the asset transfer, the asset becomes the property of Utmost International and you are therefore subject to the credit risks of Utmost International.
Please note – the information provided here is not intended to offer advice. Investors should seek professional advice regarding their own tax circumstances. The content above is based on Utmost International’s understanding of the relevant law regulation and taxation practice as of October 2022, which may change in the future. Utmost International cannot accept any responsibility for any action taken or refrained from being taken as a result if this information.
Learn about the importance of pre-migration financial planning, otherwise you may end up facing a surprise tax bill.
Nowadays more and more people are considering migrating overseas – be it for educational, economic, social, political or environmental reasons. There are many things you have to organise: visa application, international shipping and removals, accommodation for arrival, picking a school, job hunting, pet migration…
No matter what the motive for moving, financial and tax planning should be high on your checklist, especially when planning to move from a lower tax jurisdiction to a higher one; otherwise you may end up facing a surprise tax bill.
With proper planning well in advance of migration, you could mitigate the tax implications on assets. Speak to your appointed adviser to discuss how holding an offshore insurance policy like those offered by Utmost International could allow your investments to continue to grow in a tax-efficient manner both before and after your move.
Migration or returning to the UK
The UK government has opened a route for British Nationals (Overseas)(BNO) holders to gain full British citizenship, providing the opportunity for eligible individuals and their family members to live, work and study in the UK.
One thing to be aware of is that if you become a UK resident, you will be liable to UK taxes on worldwide income and gains; and there is a choice to pay personal tax either on an arising basis or remittance basis for non-UK domiciles.
There are three UK income tax bands: 20% basic rate, 40% higher rate and additional rate of 45%. Plus, you will also need to pay up to 20% capital gains tax on the gains from chargeable assets and 28% on the gains from residential property.
The UK tax year runs from 6 April to 5 April of the following year. This means you should plan at least one financial year prior to your move, otherwise you could end up having income and gains realised while a Hong Kong resident falling into the UK tax net.
When you take out a policy, make sure you ask your appointed adviser/insurer the following questions:
- Is it an offshore insurance policy?
- What type of offshore policy you have, or you are about to take out?
- Has there been a chargeable event gain for your existing policy?
- What will give rise to a gain for your policy?
- Will the insurer calculate the gain for you and send you a chargeable event certificate showing the gain when it arises?
- Does the insurer have the technical expertise to support you?
At Utmost International, we will calculate whether a gain has arisen following a chargeable event (including death of the life assured, assignment, maturity, partial or regular withdrawals and surrender of the policy etc.) and will send you a chargeable event certificate showing this calculation.
Our offshore insurance solution offers significant tax benefits for those moving to the UK, including gross roll up, time apportionment relief, top slicing tax relief, tax efficient withdrawal etc.
Speak to your appointed adviser to find out how our offshore insurance policy could be suitable for you if you are moving or returning to the UK.
Migrating or returning to Australia
The Australian Tax Office (ATO) uses a number of tests to identify an individual as a tax resident. Once identified as an Australian tax resident, you will need to pay up to 45% tax on your worldwide assessable income. This includes any profit/gain you received from an insurance policy when you make a withdrawal or surrender the policies.
Utmost International has offshore insurance solutions that meet the requirements of a life assurance policy in Australia which enables clients to withdraw money without paying income tax on the profit or gain received from the policy after 10 policy years.
Speak to your appointed adviser to find out how our offshore insurance policy could be suitable for you if you are planning to move or return to Australia.
ESTATE AND SUCCESSION PLANNING
It is important to have a solid plan in place for leaving a legacy, as well as passing wealth in a timely and tax efficient manner.
Failing to plan can have significant tax implications, not just for you but any family members left behind after a death. For example, UK Inheritance Tax is 40% where the total value of UK assets exceeds the nil rate band of £325,000 (frozen until 2026); the US Estate Tax is levied at rates of 18% to 40% where an US asset is more than US$60,000.
A will on its own may not be the most effective way to transfer substantial wealth. For instance, you need to be aware that all assets will remain frozen until probates are granted. It can also lead to family tensions or disputes, particularly in a complex family structure or if the plans have not been communicated properly.
Our solution provides you with the opportunity to allocate alternative investments in a tax-efficient manner, and at the same time allowing you to pass on your wealth tax efficiently in a controlled, timely manner.
Speak to your appointed adviser to find out about how our offshore insurance policy could help you achieve estate and succession planning with other additional benefits.
Because everyone’s needs are different, we don’t sell directly to customers or give advice on our solutions. Instead, we rely on licensed professional, independent advisers, who understand their clients’ financial goals, to recommend us based on our reputation, technical expertise and the quality of the solutions we offer.
Our solution open to new business application in Hong Kong is available to professional investors only. Please speak to your appointed adviser for details.
Depending on your personal and evolving needs, you can seek the help from a licensed professional adviser to create your own portfolio.
Key benefits of our solutions
Wealth Accumulation & Growth
Intergenerational wealth transfer
- Tax efficient wealth solutions from the reputable and highly-regulated jurisdiction of the Isle of Man
- The investor protection scheme acts as an extra safety net for policyholders, allowing them to claim compensation, in the unlikely event that a life company becomes insolvent
- Provide liquidity and allow access to capital if needed with regular and one-off withdrawals
- Access to a wider range of investment choices, and not just restricted to only Hong Kong authorised assets
- Investments can grow virtually tax free and benefit from tax deferral
- Allow asset transfer (subject to approval), to consolidate and hold them all in one place for ease of administration
- Supported by our online service platform, where you can access various policy details and manage your portfolio 24/7
- Can be issued as a cluster of polices specifically for tax planning purposes
- Provide potential tax efficiency for internationally mobile customers and expatriates who are returning to their home countries
- Simple reporting: Under the Common Reporting Standard (CRS), there is only one line of reporting in the form of the policy value by the insurer rather than each individual holding
- Useful tool for succession planning with beneficiary nominations and avoids probate delays
- Complement a trust structure, adding further flexibility in holding wealth and having control of more complex wealth distribution