Offshore Business Banking Benefits

Establishing an offshore company is not as difficult as it might appear and the benefits can be substantial, as William Essex explains

Let’s start with the basics: offshore companies give you a method of distancing yourself from your assets. This can be seriously good news. The best-known example is where you hold a UK property through an offshore company. When you come to sell the place, you sell the shares in the company rather than the property itself. Offshore-company shares don’t attract UK stamp duty in the way that property does. Therefore, you save a tax bill of 3 per cent on selling a property valued between £250,000 and £500,000 and of 4 per cent on a sale above £500,000 (in the current tax year).

That’s a flat rate on the whole amount, so, for those without rough paper and a pencil handy, you would pay £12,000 to the Inland Revenue for the privilege of selling a directly-owned house for £400,000. An extra £12,000 in your pocket would pay for a few good holidays.

Offshore Business Banking Benefits - There Are Big Catches

Therefore, it can own property (or land, or cars, or whatever). A company can also be owned. Therefore, you can own a company, and the company can own a property. If the company is sited offshore, you own an offshore shareholding. You also, indirectly, own the property. But here’s the key point. An offshore company has its own tax status as well as the ability to own assets. The company, therefore, is the taxpayer in relation to the assets it owns. And if the company is not resident in the UK for tax purposes... you get the picture.