Wealthy British taxpayers are keen to keep their money offshore, according to a new report.
Around a quarter of high net worth individuals – people with more than £620,000 or $1 million in liquid cash – favour investing in offshore financial centres.
Despite a raft of recent tax treaties and laws aimed at tightening up how the wealthy report earnings and interest from offshore investments, they are still keen to move money out of the UK.
Many investors have increased their offshore holdings in the past two years, rather than decrease them because of political and tax activity.
The report, by Ledbury Research, reveals one in four wealthy taxpayers with money managed by an IFA have cash in at least one offshore financial centre.
Most popular destinations
The Isle of Man and Jersey are the most popular offshore destinations, followed by Switzerland.
The research shows that younger, wealthier high-earners are more likely to ship their money out of the UK.
“Saving tax is the most common reason cited for moving money to an offshore financial centre,” said Ledbury’s research director Stuart Rutherford. “But nearly half of people with money offshore do not mention tax as a driver for their action.
“Offshore financial providers can offer many legitimate reasons for using their services besides tax avoidance or evasion. Although going offshore is linked with tax evasion, providers get a bad press that is not always justified.”
Meanwhile Axa, the finance group, claims 30% of offshore life protection is written for wealth transfer and estate planning.
Landmark divorce ruling
Meanwhile, a landmark ruling in The Supreme Court may stop the wealthy shielding their assets in offshore companies from former spouses.
Judges rules Michael Prest to give his former wife, Yasmin, three properties held in offshore companies in a £17.5 million divorce settlement.
The court decided the properties held by the companies in trust for Mr Prest ultimately belonged to him, and as such, should be considered as part of the settlement.
Lawyer Jeremy Posnansky QC, representing Mrs Prest, explained the judgment was a landmark in matrimonial law and “for company law and entrepreneurs”.
He also suggested the case was the “most authoritative review and refinement of the law about piercing the corporate veil since 1897” and that the ruling meant “manipulative spouses” could not avoid a fair divorce settlement by trying to protect assets in offshore companies.