Tweak makes offshore investment firms tax-efficient

Offshore investment companies and UK Real Investment Trusts have received the all-clear to be held tax-efficiently in insurance wrappers.

Effective from this month, the changes means that such companies and REITS can be held in a wrapper, like life insurance capital redemption policies and life annuity contracts, without it becoming taxable as a personal portfolio bond.

The Association of Investment Companies, which welcomed the change, points out that such wrappers are commonly used by financial advisers and wealth managers for their clients.

In the past, UK based investment trusts were eligible for inclusion but now non-UK investment companies and REITs can also be included in these wrappers.

So all non-UK investment companies, with shares traded on the main market of the LSE, and UK REITs can now be held in tax-efficient insurance policies.

However non-UK companies traded on the AIM will not be eligible for inclusion in insurance wrappers, unlike UK REITs listed on the AIM which are now eligible.

The association lobbied for the change on behalf of advisers and wealth managers who have said they should be able to access non-UK investment companies and UK REITs via the insurance wrappers to help diversify their clients’ portfolios.