HMRC’s growing interest in overseas insurance policies

Overseas insurance bonds – ‘foreign policies of life insurance’ for UK tax purposes, as defined in ITTOIA 2005 s 476 – have grown in popularity. UK resident policyholders invest in these policies to defer tax liabilities from crystallising on them until the encashment – or partial encashment – of the insurance policy. The use of these policies is increasingly scrutinised by HMRC.