offshore investments
There is considerable confusion surrounding offshore investments
because of the perception that they are ‘tax free.’
This may be the case if you are non-domiciled
for UK tax purposes or plan to retire outside the UK and take the
gains or income in a foreign jurisdiction.
However, for individuals who are UK resident
for tax purposes, tax will normally have to be paid.
So if you are investing offshore, it is
important that you understand the tax implications of the
investments you place your money in. You may be told that the tax
on a certain offshore investment rolls up ‘gross’ or is ‘tax
deferred,’ but this does not mean that the investment is tax
free.
If you are putting money in an offshore bank
or building society deposit account, bear in mind that HMRC is
taking a close interest in offshore accounts for cases of tax
evasion.
In 2007, five UK high street banks were forced to hand over
thousands of account details of customers with offshore accounts.
This led to a partial tax amnesty until June 2007 for depositors
who had failed to declare tax due on offshore accounts. Some high
profile prosecutions are expected in 2008.