Dear Sue,Many thanks for requesting me again. Nice to hear from you. I believe, you are in best of your health and spirits.Give me some time and I will revert on this issue. This is just an interim reply to acknowledge the receipt of your question.Warm Regards,
Many thanks for your patience. I just needed some time to revisit our conversation that we had in February.No, this will not be subject to any deemed capital gains. The gains would realise only when they mature in 2018.
I am sure this would help.
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Dear Sue,Yes that is correct. You will pay tax on the actual gain that you will realise.
Dear Sue,No worries at all. You are welcome to ask question any number of times you wish. I would be more than happy to keep assisting you.No, so long as I understand your situation and as per my best knowledge, they will NOT be taxed as deemed gain until they are matured.
Dear Sue,Hello again.YES -- By all means...!!
Dear Sue,Hello and welcome again. Thank you for offering me for extra time involved.
Let us first understand what "Deemed" gains are all about.
Many years ago, Her Majesty’s Revenue and Customs (HMRC) introduced restrictions to limit a UK resident policyholder’s power to select and hold certain assets. This was done to stop highly personal assets being sheltered in an off shore bond and, as a result, obtaining a tax advantage. As such, where a policy holds assets which are deemed to be ‘offensive’at the end of a policy year, the policy is viewed as personal portfolio bond (PPB) and subject to a ‘deemed gain’ tax charge, irrespective of whether there has been a gain on the policy or not.
NOW, we much shift our attention to the definition of "Offensive" asset.
Offensive assets are things which are ‘personal’ to the policyholder or rather, not freely available to anyone else, however, they can also be structured notes, unauthorised investment trusts and equities. HMRC provides detailed information, on their website, about what is and isn’t deemed to be an acceptable asset, more information can be found at the following link:www.hmrc.gov.uk/manuals/iptm/iptm7745.htm
Now, coming to your query in specific, I do not deny that they too are structured notes and but they do not fall under the definition of "Offensive" asset BECAUSE -- one of the essential requirement / feature of an "Offensive" asset is -- that they are NOT freely available to general public.
YOURS is not such case as your type of structured notes are generally available to anyone who subscribes to such investment options and therefore they should not fall under the definition of "Offensive" asset and therefore come under the purview of "Deemed" gains.
This is how my interpretation goes about.
So far as offsetting is concerned, yes, this can be done. You may be able to mitigate some or all of the gain by applying TimeApportionment Relief (TAR), further details on taxation of off shore bonds and the available reliefs can be found in our Guide to off shore bonds.