High five for bond gains

FIVE-MINUTE GUIDE TO... OFFSHORE SAVINGS BONDS

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KEY ATTRACTION The 5% rule has great appeal

CONSTANT tax hikes on savings and investments are driving a surge of interest in offshore investment bonds, as older, wealthier savers search for fresh ways to cut their exposure to HMRC. New investment into offshore bonds hit a record £10.5billion last year, more than double the £5.1billion invested the previous year.

Sometimes called international bonds, they can be used by UK residents as a tax-efficient investment wrapper for long-term savings. They may tempt those who have maxed-out their ISA allowance.

David Little, chartered financial planner and partner at wealth manager Evelyn Partners, says demand is surging as taxes rise, including capital gains tax and dividend tax, with pensions liable for inheritance tax from April 2027.

"This is driving a search for more tax-efficiency," he said.

An offshore investment bond, often shortened to OSB, is a tax-deferred investment wrapper.