Advisers can now offer clients the new Standard Life International Bond through AJ Bell’s platform, giving clients a flexible investment structure with a wide choice of investments and potentially useful tax-planning features.

It can be used alongside other offshore and onshore bonds and trusts as part of a wider range of solutions, ahead of plans to bring unused pensions into inheritance tax from April 2027.

Clients will also have greater flexibility to alter their investment strategies within the bond without triggering capital gains tax, and can take out up to 5% of the total amount paid into the bond each year, but do not need to pay tax until a later date. 

Mark Rendle, AJ Bell advised managing director, said: “Advisers and clients face a growing challenge to protect and pass on wealth efficiently in the current tax environment, and it is up to providers to ensure that the correct tools and support are available. 

“Not only does it provide clients with greater flexibility and tax efficient investment growth, but also better control over tax planning and reporting. Alongside our range of wrappers, including trusts, other offshore bonds and an onshore bond link, advisers can be confident that we are catering to a diverse range of tax and estate planning needs to help them provide the best outcomes for clients and truly feel good advising.”

Lesley Whyte, head of strategic partnerships at Standard Life, added: “As estate planning becomes an increasingly important consideration for clients with the upcoming IHT changes, advisers are looking for more tax-efficient solutions that offer flexibility and support a range of needs.”

How are offshore bonds different to onshore bonds?

An offshore bond is issued outside the UK, whereas an onshore bond is issued by UK-based life insurance companies. This means offshore bonds are not subject to UK corporation tax, whereas onshore bonds are subject to the tax on interest, income and gains. Offshore bond returns grow gross of tax, excluding unreclaimable withholding tax.

Gains in both offshore and onshore bonds are treated as savings income, taxed at the investor’s marginal rate. However, onshore bonds are treated as having paid tax on the gain at the basic rate already, as the underlying fund is taxed. This means only higher and additional rate taxpayers will pay tax on any savings income generated in an onshore bond.

Top-slicing relief, where clients spread gains over the bond’s lifetime to reduce the tax rate, may be available for both offshore and onshore bonds, but will depend on the individual’s circumstances. Withdrawals can be made up to 5% of the value of premiums paid into offshore and onshore bonds each year, with the tax deferred to allow for flexible income planning.

Advisers can manage investments in an AJ Bell Investcentre general investment account held within either offshore or onshore bonds