Offshore Savings Account

Eligibility

To apply for the Offshore Savings Account, you’ll need to be aged between 18 and 89 and have at least £500 a month, or single payments of £7,500 or more, to invest.

 Structure

Our Offshore Savings Account is an international unit-linked life assurance policy that you can open in your sole name or as a joint account. It’s a series of 10 identical policies – giving you flexibility on how you withdraw your money.

 Funds

Choose up to 10 funds from over 150 available in our Canada Life International Core Fund range. These funds cover all the main asset classes and regions. The fund selection can be changed, without charge, at any time.                    

 We offer our popular diversified Risk Managed Funds alongside more focused funds. This gives the flexibility to build an investment portfolio to suit your needs and goals.

 All our funds have undergone a rigorous selection process to make sure they meet our investment, operational, governance and compliance standards.

 What are the risks?

As with any investment, the value can go down as well as up so you might get back less than you invest. Different investments have different levels of risk and past performance is no guide to future performance. Tax rules depend on the type of investment and individual circumstances and may change.

 Withdrawing money

All withdrawals are free of charge.

 Regular withdrawals
After 36 monthly premiums or three yearly premiums have been paid, you can make withdrawals. Withdrawals can be monthly, quarterly, half yearly, or yearly. The minimum amount you can withdraw is £100. There’s no maximum amount, as long as you keep £1,000 invested.

 One-off withdrawals

You can cash-in (surrender) part of your investment at any time. The minimum amount you can withdraw is £100. There’s no maximum amount, as long as you leave £1,000 invested.

 5% tax-deferred withdrawal allowance

If you pay tax in the UK and you’ve funded your account with money that has already been taxed in the UK, the 5% tax-deferred allowance feature will be available.  The 5% tax-deferred allowance runs for 20 years from the year an investment is made into the policy and is cumulative for future years.  Also, 5% of each amount invested can be withdrawn tax-deferred, and these withdrawals don’t cause an immediate income tax liability or interfere with tax allowances or tax credits.  So, you can take regular or one-off capital withdrawals within the 5% tax-deferred allowance, without an immediate liability to tax, and the assessment to tax is deferred to a later date.

 This allowance can be used to make payments to your financial adviser.

 Cashing in

You can cash in your investment in full, at any time. However, you should always speak to your financial adviser to discuss any tax implications.

 Fund charges
Each fund has an investment management charge, which is incorporated into the amount you pay for the fund. This charge varies from fund to fund. For a full list of fund charges, visit our Fund Centre. 

The charges for our Offshore Savings Account depend on how your account is set up. You’ll find details of the charges on your personal product illustration, which can be sent to your financial adviser.

 Adviser Fees

If you want us to pay your financial adviser, we offer two options:

• We can deduct the adviser charge from your investment before the money is invested
• We can pay your adviser on a monthly, quarterly, half-yearly or annual basis

You can instruct us to either pay a set amount, or a percentage of the investment’s value.

Tax

Investment growth
Our Offshore Savings Account is provided by Canada Life International Ltd, which is based in the Isle of Man. So there’s no internal tax on the capital growth or income, which our funds generate.

A chargeable event gain may arise if the last or sole life assured passes away, if the whole account or individual policies within it are surrendered, or if withdrawals are taken in excess of the tax-deferred allowance.  Depending on your circumstances at the time, you or your trustees may need to pay income tax when a chargeable event gain arises on your Offshore Savings Account.

It’s important to remember that the value of your investment can go down as well as up, and you may get back less than you invest. The way funds have performed in the past is no guide to future performance.

 Inheritance tax
If your account isn’t in a trust, we may require sight of UK or Isle of Man probate when you pass away, and there may be inheritance tax to pay.

 By placing your investment in a trust, there are no probate requirements. Once your Offshore Savings Account has been in place for seven years, the amount of your original gift into the trust is removed from your estate entirely and will no longer be included in your estate for inheritance tax purposes.

 Depending on the amount of your original gift into your Offshore Savings Account and the size of the trust fund, there may be a liability to inheritance tax.  This liability could occur when you make the gift, at each ten- year anniversary, and/or when your trustees distribute trust proceeds to the beneficiaries.

 Tax rules depend on individual circumstances and may change. Speak to your financial adviser if you need more information on tax.

 Explore our trusts and see how they could help you pass on your wealth in a tax-efficient way.

 Trust options

You can use a trust with your Offshore Savings Account. This could mean there are no probate requirements and may also reduce the amount of inheritance tax that needs to be paid when you pass away.

This account can be used with the following trusts:

• Gift and Loan Trust
• Gift Trust
• Probate Trust
• Excluded Property Trust

Trusts explained. Find out more about the types of trust we offer and how they could help you pass on your wealth in a tax-efficient way.

Tax rules depend on individual circumstances and may change. If you need more information on tax, please speak to your financial adviser.

Can I change my policy once it’s set up?

Our Offshore Savings Account is very flexible, and you can easily change things like which funds you are invested in and how much you want to withdraw. You can’t change the life assured, but ownership can be changed during the lifetime of the bond by deed of assignment or trust.  If you have any questions, please get in touch with our customer services team, who’ll be happy to help

How will I know how my investment is doing?

We’ll send you a yearly statement showing you the value of your investment.

 What happens if I die?

If you’re the only life assured a death benefit will be payable which is the value of your investment plus £100, when you die. If there is more than one life assured, the account can continue until the death of the last life assured when the death benefit will be payable. The claimant may be asked to provide UK or Isle of Man probate at the time e.g. where the policy isn’t in trust or there is no will. By using a trust with your account, you’ll be able to choose who’ll receive the death benefit when you die, and this may also avoid the need for probate.

Can I change my mind and cancel my account?

Yes, you can cancel your investment up to 30 days after you receive your policy information.

What happens if I move abroad?

You’ll need to let us know if you or one of the trustees becomes a resident in another country. In most cases we can continue to administer your account without any changes, but there may be countries where we are prohibited from conducting business. If you move to such a country, you may no longer be able to pay any premiums into your Account or switch funds. You might even need to surrender your account.

Please speak to your financial adviser, as well as your professional tax adviser, if you’re thinking of moving abroad to understand how this might affect you.

How do you protect policyholders?

If we’re unable to meet our liabilities, policyholders are protected under the Isle of Man Life Assurance (Compensation of Policyholders) Regulations 1991. This compensation scheme will pay up to 90% of our liabilities to all our policyholders.

Where are the premiums invested?

Your premiums are invested into your chosen Canada Life International Limited funds. Each fund is divided into equal parts called units and we use your premium to buy as many units in your chosen funds as possible.

You can choose up to 10 different funds and switch between them as often as you like, for free.

As with any investment, values can go up and down and different types of investment have different levels of risk. You may get back less than you invest and past performance is no guide to the future.

Can the amount paid in be changed?

Yes, you can increase your regular saving amount and add one-off amounts at any time.

You can also reduce the amount you save – as long as it’s after the three year minimum contribution period. Although you’ll always need to pay in at least £500 a month or £6,000 a year.

Application Offshore Savings Account Application   Guides Offshore Savings Account Client Guide CLI and CLIAI Charges and Fees

Product Literature Offshore Savings Account Key Features Document Offshore Savings Account Key Information Document Offshore Savings Account Policy Provisions Offshore Savings Account Suitability Report

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Isaac’s goals

Isaac has some spare income and would like to start saving for his children’s future. He wants to put money aside on a monthly basis and save in a tax-efficient way.

Regular saving

After speaking with his financial adviser, Isaac opens an Offshore Savings Account, paying in £1,000 every month.  

Isaac’s financial adviser also recommends that he puts the account into a discretionary gift trust, with his children and potential grandchildren as the beneficiaries, and Isaac and his wife as trustees.

Reducing inheritance tax

Gifts of surplus income can be made, and they are exempt from inheritance tax as long as this doesn’t affect your normal standard of living, and you have an established pattern of giving your surplus income away. Isaac has chosen to put his Offshore Savings Account in trust, so each monthly premium of £1,000 will be a gift into the trust. Currently, he has enough income to afford the premiums and maintain his normal standard of living, so the money he pays into the Offshore Savings Account is covered by this exemption. Premiums covered by this exemption, and any growth on the Offshore Savings Account, are immediately outside of his estate. Isaac understands that these premiums are an ongoing commitment, and he might not be able to use this exemption if his own income needs change, so he agrees to have regular reviews with his financial adviser to consider this.

Supporting his children

Years later, Isaac’s children have settled into their careers and are looking to buy their own homes. The trustees, including Isaac, decide the money in the Offshore Savings Account can help towards a deposit on a house. They speak to their financial adviser, who explains there are different ways of taking money from the Offshore Savings Account, and there may be income tax to pay if taking the money out results in a chargeable event gain. After talking about this, they withdraw a lump sum amount within the 5% tax deferred allowance. The financial adviser has confirmed this is the most tax efficient way, as there is no immediate chargeable event gain resulting in an income tax liability for Isaac or the children.

Supporting his grandchildren

Isaac continues to pay money into the account, so the savings start to grow again. As his children grow and have children of their own, Isaac and the other trustees consider using the money to help fund his grandchildren’s education.

Isaac’s grandchildren are beneficiaries of the discretionary gift trust, so the trustees can do this. They remember that there may be income tax to pay depending on how the money is taken out, so they speak to their financial adviser again. The financial adviser sees that there isn’t enough 5% tax deferred allowance available to take the amount they want, so suggests that the trustees surrender individual policies from the Offshore Savings Account instead. As this would cause a chargeable event gain which Isaac would be personally liable to pay income tax on, the financial adviser suggests absolutely appointing the individual policies to the beneficiaries before cashing them in. This means that the chargeable event gain and any income tax is based on the grandchildren’s income tax position, rather than Isaacs’s. As they are non-taxpayers, this is far more tax efficient.

What are the risks?

A chargeable event gain may arise if the last or sole life assured dies, if the whole account or individual policies within it are surrendered, or if the withdrawals taken are more than the tax deferred allowance. Depending on the type of trust used and the circumstances at the time, you, your trustees, or beneficiaries may need to pay income tax when a chargeable event gain arises on your Offshore Savings Account.

The value of your investment can go down as well as up and you may get back less than you invest. The way investments performed in the past is not a guide to how they’ll perform in the future.

Tax rules depend on individual circumstances and may change.  If you need more information on tax, please speak to your financial adviser.