CGT fears cause steep dip
in IFA offshore bond sales
BY HELEN BURGGRAF
The first quarter of 2008
saw a “significant drop” in
offshore bond sales in the
UK as IFAs stopped recommending
them to clients in
the expectation a change
to capital gains tax (CTG)
would reduce the advantages
of owning them.
Sales fell 15% during
January, February and
March, compared with
the final three months of
2007, according to Fraser
Donaldson, principal consultant,
investments, at
consultancy firm Defaqto,
which has just produced
its latest report on the UK
offshore bond market.
The drop came following
an 11% rise in offshore
bond sales in 2007 over the
Donaldson: ‘significant drop’
previous year, he said.
Data for the second
quarter of 2008 is not yet
available, but Donaldson
said it is likely offshore
bonds will continue to
suffer from the less beneficial
tax treatment UK
owners of such products
enjoy following this year’s
budget, which saw a flat
rate of CGT introduced.
He noted that there con-
tinued to be “advantages,
particularly for some clients”
in owning them. These clients
include resident nondomiciled
individuals, who
were also targeted in the
budget with less favourable
tax treatment.
UK life insurers are also
good at packaging bonds
in ways that make them
easy for IFAs to sell, and
enabling them to remain
competitive with other
investments products such
as mutual funds, he said.
The bond market has
also been hit this year by
the decline in equity markets
resulting from the credit
crunch, the need to adapt
to new trust legislation, and
the time and effort needed
to defend the validity of
offshore bonds, Donaldson
noted in his report.
FPI extends allocation rate
offer on two savings plans
Friends Provident
International (FPI) is
extending a special offer
that gives higher allocation
rates to new investors in
two regular premium savings
plans.
The deal had been due
to expire in June, but will
now run to the end of
September.
Investors who submit
new applications for the
company’s Premier savings
plan will receive an
increased allocation rate of
up to 137.5%, while new
QUALIFYING CRITERIA
� Applies only to new applications for FPI’s Premier and Premier
Ultra plans received up to and including 30 Sept, 2008.
� Min premiums: Premier, US$500 per month or currency equivalent;
Premier Ultra, US$1,500 per month or currency equivalent.
� Min term of 10 years and max term of 25 years for both plans.
� Only complete years will apply towards calculations.
Source: FPI
LIFE NEWS
applicants for its Premier
Ultra Plan subscribers will
receive as much as 155%,
according to FPI. Current
investors in the plans can
obtain the new higher rates
by increasing their regular
contributions, the firm said.
The two savings plans
are not available in Hong
Kong or Europe.
The increased rates will
be applied to the full 18month
initial unit period on
investments with a minimum
term of 10 years and
a maximum of 25 years.
To view a Ceros magazine you need to have JavaScript enabled in your browser and have the flash player 8 or higher installed. To install the latest flash player, click the icon above, install the flash plugin and then click here to refresh this page.