Adviser KnowHow: How to advise expats on offshore tax planningDocument Transcript
ADVISER KNOWHOW EPISODE 17 19 FEBRUARY 2013 HOW TO ADVISE EXPATS ON OFFSHORE TAX PLANNINGAdviser KnowHowA programme for advisers by advisersProduced in association with BNY Mellon, Adviser KnowHow is anew groundbreaking programme, created specifically to help youand your business. Every week we speak directly to your peers inthe industry to understand how they have addressed some of thekey issues that advisers face every day of their working lives.Get involved and add your views on twitter: @Adviserknowhow
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ADVISER KNOWHOW EPISODE 17 19 FEBRUARY 2013 HOW TO ADVISE EXPATS ON OFFSHORE TAX PLANNINGAdviser KnowHow The weekly tv programme for advisers by advisersHOW TOAdvise expats onoffshore taxplanning Advising expatriates on offshore planning can provide advisers with an entire spectrum of opportunities. The population of expats is growing and along with that, their need to save. However, the cost of regulation and compliance as well as ever-changing tax legislation can be a challenge.KEY 1 Where opportunities liePOINTS 2 The pitfalls 3 Products to consider
ADVISER KNOWHOW EPISODE 17 19 FEBRUARY 2013 HOW TO ADVISE EXPATS ON OFFSHORE TAX PLANNINGKey PointsKey points for this week’s Adviser KnowHow featuringan interview with Sam Instone of AES International:1) Where opportunities lie: 3) Products to consider: • Clients are usually upwardly mobile, gathering assets • Offshore pensions: the list of qualifying recognised as they move overseas pension schemes (Qrops) is often being • Frequent touch points and opportunity for advice changed by HM Revenue & Customs through tax planning • Offshore bonds • Growing amount of population as migration increases2) The pitfalls: • Over-commitment: planning for expats take a lot of time and effort and providing advice can be a bit riskier if not done properly • Convincing clients to save rather than spend money on luxuries • Expats are often exposed to bad advice due to lack of regulation in certain legislations which can lead to complicated portfolios. • Expensive compliance costs to keep up with different tax regimes, legal regimes and regulation
ADVISER KNOWHOW EPISODE 17 19 FEBRUARY 2013 HOW TO ADVISE EXPATS ON OFFSHORE TAX PLANNINGProgramme transcriptI look at regulation and change You need to consider theas very much here to stay and jurisdiction that the individual’sit’s only going to increase and living in, because an offshoreincrease. bond may not be suitable forSam Instone everybody.AES International Sarah Lord, Killick CharteredThis week, we’ll be discussing offshore planning, i.e., how much you’re paying into etc, and they can be good tools, goodplanning for expatriates. Giving advice a plan, that’s first and foremost. Also, one products effectively to help people getto expats can offer a whole new world of the major pitfalls with many expats, is money in a tax efficient environment,of opportunities, as well as a few new that they’ve given up a lifestyle, wherever where they’ve got a high disposablechallenges. they live in the world, to earn more money, income. Certainly higher than they might Here with me now is Sam Instone, but you need to make sure they save it, be used to in the UK.chief executive of London based AES rather than buying the villa or buying theInternational. But before we speak to Sam, Porsche and having nothing to show for itlet’s have a look at what other financial at the end of it. END OF VOX POPSadvisers have to say about offshoreplanning for expats. ROB WILCOCKS High charges and front-loaded MICHELLE ABREGO commission. That leads into the second So Sam, what are the benefits ofVOX POPS one I suppose, which is unscrupulous offering offshore advice to expatriates? networks and advisers. For example, inAre there benefits in offshore planning some regions, the lack of regulation is SAM INSTONE,for expats? quite frightening really. AES International I look at this type of market as hugelySARAH LORD, What are the advisable products to use fascinating and very exciting. Inpats,Killick Chartered when offering offshore planning for expats, multi-jurisdictional, non-domicile,It presents opportunities for us and for the expats? cross-border financial advice providesupwardly mobile client. We can provide an entire spectrum of different financialsolutions for them to meet their needs not SARAH LORD planning opportunities and all the nichesjust in the UK, but overseas as well. Over the years, certainly since 2006, that you have onshore, you then have we’ve seen the significant promotion of offshore. But there are three key main areasROB WILCOCKS, offshore pensions – Qrops - and obviously which make this particularly challenging toWilcocks and Associates in the last 12 months or so, the HMRC financial advisers, and that’s the interplayA key one revolves around tax. has clamped down on that. The other of different national regulations, differentOften expats will be in a tax efficient products really to consider are offshore tax regimes, and different legal regimes,environment. Some of the products out bonds, but again, you need to consider which you have to make sure you get rightthere available in the market can help the jurisdiction that the individual’s living for each and every different jurisdiction.expats to save efficiently - tax efficiently - in, because an offshore bond may not befor their retirement, or indeed just for a set suitable for everybody. MICHELLE ABREGOperiod of time. Exactly how big do you think this ROB WILCOCKS niche is and is it what your companyWhat are the pitfalls that you should be The one that most people that most specifically caters to?aware of with offshore planning? people would start with, in terms of getting started, I suppose is a regularDAVID HOWELL, savings plan. The offshore market does SAM INSTONEGuardian Wealth include lots of regular savings plans from Potentially this market is huge. That marketThe major thing is, don’t over-commit on the likes of Royal London, Skandia… demographic and the global nature of this
ADVISER KNOWHOW EPISODE 17 19 FEBRUARY 2013 HOW TO ADVISE EXPATS ON OFFSHORE TAX PLANNINGOne of the major pitfalls with many expats, is that they’ve given upa lifestyle, wherever they live in the world, to earn more money, butyou need to make sure they save it...David Howel, Guardian Wealthmarket means that there really is a global advice or do you see it very much stillopportunity with increasing migration - a niche?the huge amount of expatriates movingoverseas each year, it really is an exciting SAM INSTONEopportunity. Our organisation has 12 I think historically, international clientsinternational offices and looks after probably haven’t received the bestabout 13,000 expatriate clients. We hold outcomes. A lot of UK advisers wanting34 different types of licences, both for to escape from regulation have movedinvestment and insurance business, and overseas so it hasn’t got the bestwe really want to focus purely on this type reputation -the quality of internationalof opportunity. advice. I look at regulation and change as very much here to stay and it’s only goingMICHELLE ABREGO to increase and increase. What I’d hope isAre there any costs as an adviser that, over time, as opposed to historicallyoffering offshore advice to expatriates? attracting in people who want to escape regulation, we attract in people who are passionate about multi-jurisdictionalSAM INSTONE inpats, expats and non-doms and whoProviding international advice in a really want to benefit clients and want tocompliant manner is very expensive, be able to give knowledge-driven advicebecause we maintain a lot of overseas along UK retail distribution review groundsoffices, a lot of different regulatory for clients, regardless of jurisdiction.licences and lots of different types ofinsurance. I think that’s reflected in the MICHELLE ABREGOconventional market for clients, in that Great, thank you very much for your time,typical offshore products and offshore Sam. I think you’ve given advisers a lotadvice is more expensive. Looking at the of information on how to help expatriatesdifferent tax regimes, the different types out.of markets historically available, I thinkthere’s a really good opportunity with SAM INSTONEEuropean legislation Mifid, Prips review… You’re welcome.for international clients to get muchbetter standards of advice, to look at theRDR and look at the UK, look at what’s MICHELLE ABREGOhappening in markets such as Holland, You can download the cribsheet forlearn from that and make sure they get this week’s edition at citywire.co.uk/better outcomes in the future. adviserknowhow or bnymellonam. co.uk/adviserknowhow.MICHELLE ABREGOOK, I guess going forward, do you Or you can find the link and add yoursee more advisers going into offshore views at @AdviserKnowHow on Twitter.