I have a question about personal portfolio bonds, and whether income within the bond would constitute relevant foreign income. The situation is as follows:
Our client is UK resident but not UK domiciled. He has a personal portfolio bond outside the UK. Acquisition of the bond was with clean capital and the bond has increased in value significantly since acquisition.
The client needs some additional funds in the UK but doesn’t necessarily want to break the bond, as this would be taxed in the UK as income (without the remittance basis being available). He is therefore looking at borrowing against the value of the bond. However, if income in the bond represents relevant foreign income, bringing the loan proceeds to the UK would be a remittance under the loan collateral rules.
I cannot find any guidance on whether the income within the bond would constitute Relevant Foreign Income – does anyone else have experience on this?
Many thanks in advance
Tom Barker
Charter Tax