OFFSHORE LIFE BONDS FROM STM LIFE

An Offshore Bond is a unit-linked insurance wrapper which contains a range of underlying assets.

The STM Life bonds allow you complete freedom to either create your own bespoke portfolio or to appoint an Investment Adviser to manage the portfolio. Alternatively STM Life will appoint an Investment Adviser to the bond.

In most jurisdictions an Offshore Bond is viewed as a non-income producing asset and investments can generally be traded without incurring immediate tax liabilities, other than a small amount of withholding tax deducted at source. This allows you to benefit from tax deferral as taxation charges will not arise until certain withdrawals are taken from the bond or the bond is surrendered.

UK policyholders currently have an added advantage of taking 5% of the initial premium per annum, as a tax-deferred partial withdrawal, without giving rise to an immediate tax liability. This is known as an annual "Permitted Allowance" and if not used then it may be carried forward to the following year.

UK Capital Gains Tax rises 10 per cent from midnight

22 June 2010(updated 28 June 2010)

UK Chancellor George Osborne has announced a 10% increase in Capital Gains Tax (CGT) for higher rate taxpayers in his emergency budget.

Changes to the CGT rate will take place from midnight today.

The new 28% rate is significantly lower than the estimates of 40-50% campaigned for by the Liberal Democrats and mentioned in the coalition’s agreement, which said CGT would reach "rates similar or close to those applied to income."

KEY BENEFITS OF STM LIFE OFFSHORE BONDS

• Gross Roll-up - the underlying portfolio gains (other than withholding tax) are not subject to tax at source
• Control of Tax Point - You can choose when to take benefits, for example when you are a lower tax payer or no longer a UK resident
• Time Apportionment Relief - If you are likely to spend time living outside the UK then any chargeable gain arising on the bond will be reduced, in the proportion to the period of time that you have been non-UK resident
• Wide Range of Allowable Assets
• Bond Assignment - Assignment between spouses and civil partners are generally exempt from UK inheritance tax and therefore it may be tax efficient to assign the bond to a spouse /civil partner who is a non tax payer. Assignment to a spouse or civil partner would normally be exempt from inheritance tax
• Inheritance Tax Planning - Assigning a bond into trust can allow the beneficiary to make withdrawals or cash in the bond when the trust is would up. This could save tax as they may be a basic or non tax-payer.

Read more about STM Fidecs Offshore Bonds

NOTIFICATION OF RISK

STM Life Assurance PCC Plc ("STM Life") is structured as a Protected Cell Company (a "PCC") subject to the provisions of Gibraltar's Protected Cell Companies Act 2001. This means that STM Life may create legally recognised "cells" within the company in order to segregate and protect each Policyholder's assets. Each cell has its own designation (the policy number) and it is the duty of the Directors to keep the assets and liabilities of each cell separate and therefore accounted for separately. The legislation prohibits the assets of a cell to be used to satisfy any liability not attributable to that cell. In the event that the liabilities of a cell exceed the value of its assets, the shortfall will be payable from the solvency capital of STM Life.

The added protection offered by the PCC would undoubtedly be effective in any legal proceedings brought in Gibraltar. However, the Directors of STM Life know of no legal challenges to the PCC concept in any other jurisdiction. They are therefore unable to give Policyholders an assurance that the courts of another country would grant the level of protection for cellular assets intended under Gibraltar's Protected Cell Companies Act.

STM Life Assurance PCC Plc ("STM Life") is a company incorporated in Gibraltar under the provisions of the Gibraltar Companies Act and whose registered office is situated at Montagu Pavilion, 8-10 Queensway, Gibraltar, with incorporation number 100244 and is licensed by the Commissioner of Insurance under the Insurance Companies Act to carry out assurance business in Gibraltar.

STM Life's Bonds are single premium unit-linked policies, comprising one Policy which may be divided into a set number of identical sub-policies (segments)