company investments
A number of companies have cash reserves sitting on deposit.
Obviously, some need these reserves to support the business on
a day-to-day basis. However, many other companies wish to commit
funds to the longer term. To maximise the return from their capital, companies should be looking for these cash reserves to work harder.
Pension planning has been a common option. Although this has benefits such as tax relief on contributions, increased growth potential, etc, many companies are reluctant to give up access to their capital. However, there is a solution that combines some of the benefits of both options
Offshore Investment Bonds
These are becoming increasingly popular and they offer some
important advantages for companies.
Tax advantages
Although payment into offshore bonds is not tax deductible, like pensions, they do
benefit from virtually tax-free growth (apart from some irrecoverable withholding
tax on dividends).
Tax on bond gains can be deferred, and because tax is not charged on an annual basis (like deposits), companies can save a significant annual tax bill.
There has been a trend for decreasing rates of corporation tax and by deferring tax on bonds, companies have the potential to pay tax at a lower rate in the future.
Control
Offshore bonds offer tax-efficient access to capital (unlike pensions) through the annual 5% cumulative withdrawal facility.
These tax-deferred 5% withdrawals could be used to fund regular pension contributions.
Bonds are also useful for deferred pension planning. Investing in a bond now will give growth potential and access to capital, and it can be cashed in at a later date with the proceeds applied to a pension.
Growth potential
You are able to access a wide number of investment funds enabling to build an investment portfolio whatever level of risk you wish to take.
