Last Updated on 15th March 2026
Investment bonds are one of many potential products expats around the world can use within their portfolios, as a way to grow their capital over the long term.
Bond assignments enable expats to transfer their bonds to family members or spouses without an immediate tax charge arising, providing the transfer doesn’t involve any payment. This allows foreign nationals to gift bonds to children, avoid tipping into a higher income tax bracket, and plan efficiently for inheritance taxes.
We’ll look more closely at what investment bonds are, what the assignment of an investment bond means, and when it may be beneficial.
What Is an Investment Bond?
There are diverse types of investment bonds, but for expats the most relevant are often offshore bonds where capital can grow tax-free, compounding gains efficiently until the owner makes a withdrawal.
Other options include Personal Portfolio Bonds (PPBs), although these are subject to strict controls, and onshore bonds, usually issued by insurance companies in the UK.
Bonds act as life insurance policies that perform based on the funds being invested in, where expats can either invest capital once or contribute regular premiums. The difference between an investment and a corporate or government bond is the insurance aspect and the fact that the interest isn’t fixed.
What Does the Assignment of an Investment Bond Mean?
Assigning an investment bond is a change of ownership or assignment of policy ‘segments’ supported by a legal deed of assignment.
When you assign an investment bond or policy segment, the person you have assigned it to, often a spouse, partner, or child, becomes the beneficial owner, as if they had owned the bond from day one.
How Are Investment Bonds Beneficial for Foreign National Expats?
Investment bonds are a strategic tax-management product, enabling expats to grow their wealth tax-efficiently without ongoing tax liabilities, with additional reliefs and options such as:
- Time-apportioned relief: Expats with offshore investment bonds may be able to reduce UK-based tax burdens by claiming exemptions for the period the bond was held when they were not considered British tax residents.
- Top-slicing: Enables foreign nationals to limit the risk of falling into a higher income tax bracket by annualising their gains and spreading them over the years the bond is held.
- Bond assignments: Assignments, which we’re focusing on here, mean that investment bondholders can assign the bond to a close relative without a tax levy.
Expats can also work with their financial adviser or wealth manager to develop tax-optimised withdrawal strategies, depending on how reliant they are on their product to finance living costs and their overall tax position.
What Are the Benefits of Assigning?
The assignment of an investment bond is most common when the expat holder either wants to find a way to compliantly reduce their tax liabilities, or as part of succession and inheritance planning:
- No Capital Gains Tax: Investment bonds can be gifted to an adult child without a capital gains tax charge. Gifting other types of investments would be treated as a disposal for capital gains tax purposes.
- No Initial Income Tax: An assignment is not a chargeable event and doesn’t give rise to an income tax charge, provided the assignment is not for money and is instead a gift.
- Transfer to a Trust: Holders can transfer an investment bond to an individual or a trust for inheritance tax planning without causing an income tax or capital gains tax charge.
- Minimise Income Tax: It’s possible to minimise income tax by assigning the investment bond or segments of it to a taxpayer who will pay a lower tax rate on encashment.
The assignment is technically classified as a gift for Inheritance Tax purposes. If the original holder lives for 7 years or more after making the gift, then the full value of the bond should fall outside of the scope of Inheritance Tax calculations.
Other Tax Planning Opportunities when Assigning an Investment Bond
Expat policyholders can assign an investment bond to an adult child to cover their university costs. This may be especially worthwhile if the child’s personal allowance is unused and/or there would be no further tax to pay on an onshore investment bond because any gain, or top-sliced gain, would be within the basic rate tax bracket.
By assigning a bond, the child can use the funds to access financial assistance through university, and there is the option to gradually assign bonds to finance education costs.
Disadvantages of the Assignment Process
Once an investment bond has been assigned, it is owned by the other person, so the original holder no longer has any control over or right to it.
If the new owner passes away or the giftor dies within seven years, the full value of the bond may be taken into account for inheritance tax, although there may be options to incorporate bonds into a trust structure.
Likewise, if the new holder of the bond divorces a partner, the full value of the bond could be taken into account in any divorce settlement. However, insurance bonds cannot be included in means tests, for example, for care home fees.
Further Information About Investment Bonds, Assignments and Managing Your Finances Tax-Efficiently as an Expat
While there are numerous products and investment strategies available, insurance investment bonds continue to represent one of the most flexible investment products on the market and are tax-efficient, with the underlying assets growing free of capital gains or income tax.
Investment bonds also attract both time apportionment relief and top slicing relief, as we’ve mentioned, which can prove beneficial regardless of whether or not an assignment would apply to your circumstances.
If you’d like to learn more about the use of investment bonds within your portfolio, the best ways to manage your wealth and retirement savings across borders or explore the potential to assign a bond to a loved one to improve your tax position, you are welcome to contact any of the Chase Buchanan Private Wealth Management offices to arrange a convenient time to talk.
© Chase Buchanan Private Wealth Management.
Chase Buchanan Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission with CIF Licence 287/15 and offers its services in the EU on a cross-border basis as per the provisions of MiFID.
Chase Buchanan Insurance Services, Agents & Advisors is authorised and regulated by the Cyprus Insurance Companies Control Service with License No 6883 and offers services in the EU on a cross-border basis as per the provisions of the Insurance Distribution Directive (IDD).
Investing in financial instruments involves risk and may not be suitable for all investors. The value of investments may go up as well as down and past performance is not a reliable indicator of future results. You may lose part or all of your invested capital.
*Information correct as at March 2026
