They are investments made in funds based outside the UK, usually in low tax areas. Such areas include the Channel Islands, the Isle of Man, Luxembourg and Dublin.

What are the benefits of offshore investments?

For someone who is a UK resident and UK domiciled, the only benefits are the payment of income gross and possible tax deferral. There can be tax disadvantages if the selected offshore fund itself invests in UK shares.

For people who are living abroad and classed as non-residents (of the UK), or UK residents whose domicile is not the UK, there may be additional benefits, including capital gains tax advantages and inheritance tax benefits.

Residency and place of domicile and the associated taxation implications have been reviewed by HM Revenue & Customs.

What offshore investments are available?

The range of investments available offshore is much greater than for onshore investments. They include a wide range of collective funds, such as unit trusts and OEICs which are often held inside investment bonds. In addition to the normal funds available onshore, other funds based in different geographical areas and in different market sectors can be included in offshore investments.

This greater number of investments can help diversification of portfolios. However, offshore investments can have a higher risk and be more complicated, and not all are regulated. Therefore extra care should be taken in their selection.