The types of offshore bonds (sometimes referred to as professional portfolio bonds) are varied and offer different advantages to investors to match their individual requirements.

TAX FREE GROWTH OF FUNDS
The underlying investment funds linked to a bond are owned by the life insurance company. All income and capital gains which the funds generate are reinvested into units. Many such instruments are based in the Isle of Man or Guernsey (the world-leading jurisdictions for offshore insurance) and therefore don’t pay tax on income or capital gains.

TAX DEFERRAL
Because income and gains grow free of tax, the policyholder can defer any tax liability on their capital until the benefits are taken. In most countries, bonds are considered non-income producing.

TIME APPORTIONMENT RELIEF
This means that tax can be reduced proportionately for time spent as a non-resident and additional investments are always deemed to be made at the initial investment date, even if made when resident again. Regular investments are treated the same.

How it works:
The A/B Rule. A = Number of days spent in UK. B = Number of days policy has been established.

For example: Mr. Jones has a policy worth £200,000 and his gain is £100,000. He started this plan when he was offshore 10,000 days ago, and he returned to the UK 1,000 days ago.

Calculation: 1000/10,000 x 100 = 10%. Therefore, 90% of the policy can be encashed in the UK with no tax liability.

TAX EFFICIENT ACCESS TO CAPITAL VIA WITHDRAWALS
In the UK, an amount equal to five per cent of the premium paid can be taken each year, for a maximum of 20 years, without incurring an immediate income tax liability. With portfolio bonds, this avoids the necessity of selling units to obtain an income.

INVESTMENT CHOICE
A bond offers the ability to restructure and change investment policy within the bond, without changing the investment vehicle.

BETTER TERMS
As an institutional investor, life offices can generally obtain better discounts/terms from investment houses than an individual and these savings are passed on to the policyholders. For example, if an individual were to buy units in a fidelity fund, then he’d pay a 5% bid/offer spread, but this could be reduced to as little as 0.25%, if purchased via a bond.

INVESTOR PROTECTION/PEACE OF MIND
In the unlikely event that a company should go into liquidation, the Isle of Man Life Assurance (Compensation of Policyholders) Regulations Act 1991 covers up to 90% of an insurer’s liability to the policyholder. The same applies for moneys held in Guernsey, as all investments there have to be held by a secure third party custodian. There’s no upper limit to the amount of compensation that can be paid. This makes the Isle of Man and Guernsey two of the best regulated international finance centres in the world.

CGT FREE SWITCHES
By actively managing a portfolio of funds the investor can switch between funds without incurring any tax liability. Normally, if investments are held directly, any disposals incur a capital gains tax liability.

ADMINISTRATIVE CONVENIENCE
Regular valuations keep the investor informed about the progress of the bond via a comprehensive statement detailing all transactions and the value of funds held. Centralising assets based in different countries under a bond wrapper may be attractive, as on death this would only involve obtaining Manx or Guernsey Probate. A professional administration service performs all transactions, relieving the client of the burden of time-consuming paperwork.

TRUSTEE INVESTMENTS
Offshore bonds are ideal trustee investments as they’re non-income producing and offer true tax deferral and little administration burden to trustees. We’ve several trust solutions for our potential clients.

POLICY ASSIGNMENT
It’s also possible to change the policy ownership, by assignment. In general, the new policy owner can then surrender the policy, and any tax liability will fall on him. If the new owner is a non-tax paying spouse, she can offset her unused personal allowances against any gains and pay less tax. This is also very useful for university fees funding.

NON RESIDENCE RELIEF – UK EXPATS
Any periods of non-residence will be relieved of income tax on final encashment. Top-slicing relief may be used for any periods of UK residence if the tax payer is within the basic rate tax band. This may save 18% tax on any chargeable amounts.

CGT V INCOME TAX
Until recently, it has been a feature of UK tax law that individuals who made capital gains were not liable for CGT, if the gain was realised while they were ‘non-UK resident’ or ‘ordinarily non-resident’. Clause 127 of the Finance Act 1998 changed that position. Under the new rules, individuals who have been UK resident for at least four out of the previous seven tax years prior to the tax year of departure will continue to be liable for UK CGT, on disposals they make whilst non-resident, if they return to the UK within five years. The new rules apply to individuals who leave the UK after 17th March 1998 and apply to assets they held prior to their departure. If the individual is UK domiciled, the charge would be on worldwide assets.

An alternative, and potentially much safer approach, would be to contribute to investments which are not subject to CGT i.e. offshore regular and single premium life assurance policies. They’re fully portable, as the investor moves from jurisdiction to jurisdiction. In most countries, no tax charge arises until the benefits are taken.

George Lindsay, Wealth Manager at Expat Solutions

Posted under Lifestyle, Property News

According to Forbes magazine, Warren Buffet, the CEO of giant American investment fund Berkshire Hathaway, is the world’s second richest man. He’s made a fortune for himself and his fellow shareholders by investing in the world’s stock markets over many decades. The great stock market crash of 2008 began in September. Many people cringed when Buffet went back into the markets aggressively the following month, well before the markets bottomed in February this year. The point I’m trying to make is that if the world’s most successful investor of all time doesn’t know when the markets have bottomed, then what chance for the rest of us? It’s well-nigh impossible to second guess share price movements, and this is why I’m a keen advocate of unit cost averaging. The so-called drip-feeding approach, investing a little at a time, can be very beneficial whatever the markets are doing. It can make a big difference to the performance of a portfolio, whether it’s a lump sum investment or a regular savings plan generating a pot for retirement, school fees etc. This is how you can benefit from volatility and price fluctuations.

Volatility is inherent in equity investing. It’s important for you to realise that market fluctuations are normal and you should therefore be aware of the risks. Fluctuating share prices obviously mean that the unit prices of funds will also fluctuate, thereby impacting on the value of your portfolio. This is where a strategy of regular investing or drip-feeding really pays off.
The following example demonstrates what can happen when investing in periods of high volatility.


Key points

• The effect of the fluctuating unit price has meant that Example B has ended up with a higher fund value than in a steadily increasing market. Even though the unit price is actually lower at the end of the example than it is at the start.
• To reap benefits from stock markets an investor need not necessarily have a large lump sum to invest.
• Unit cost averaging holds obvious benefits for investors making regular savings/premiums.
• It is important to consider the risks associated with all types of investment, particularly those associated with equity markets.

With the above in mind I think it appropriate to show again how the markets have performed over the recent past. As you can see there have been periods of high volatility. Unit cost averaging has worked during this time to great effect, and no doubt will do so again in the future.

The bigger picture
The case for investing in equities
Taking into account the effects of any short term volatility, the case for investing in equities remains as strong today as it has ever been for those investors with a long-term investment horizon. Over the last 25 years, an investment in the S&P 500 would have grown to almost 20 times its original value.

George Lindsay, Wealth Manager at Expat Solutions

Posted under Investments & Financial Opportunities, Lifestyle, Property News

Phuket, and its surrounding areas, has become one of Thailand’s best-established markets for hotel, villa, condominium and resort-related businesses. Although demand has slowed over the last 18 months, new developments continue to proliferate across the island. In geographical terms, development zones in Phuket can be broadly divided into five areas – north, west, south, east and inland.

With high concentrations of villa development and a resulting shortage of developable sites in the west, the most recent construction has been concentrated in the north, east and southern areas. The east of the Island provides opportunities for marine-related developments and tourism. Some villa developments there, such as The Cape and The Bay have been effectively marketed internationally. It’s anticipated that this area will begin to see more varied development in the next few years in response to the demand from both clients and investors.

Generally, In terms of unit types in all resort locations, two-bedroom configurations comprise the largest proportion, already constructed or currently being built. This design is well-suited to meet the demand for holiday accommodation. Increasingly, such properties are also being purchased on a ‘buy-to-rent’ basis.

The beauty of the beaches in Thailand and the price of land, which internationally is still perceived as reasonably good value for money, continue to be strong attractions for buyers wishing to invest in a holiday residence or second home.

Tourism related opportunities will, of course, continue to be the mainstay of Phuket’s real estate market, for many years to come. The island is now established as a major international holiday destination.

With a growing number of repeat and new tourist arrivals year-on-year, opportunities will continue to exist for all segments of the hotel industry. In the low-end sector, there will always be student and backpacker tourism, as Phuket is recognised as a base for Andaman Sea island hopping. The midrange market segment will see renewed growth once homeland job security is restored. The top end of the market will continue to experience strong demand attributable to the diversification and greater financial stability of the clientele. There continues to be a need for good branding and service delivery in all sectors. The marina tourism segment in particular will see renewed growth when the global economy stabilises.

According to Thai law, foreigners can purchase up to 49% of the saleable area in any freehold condominium project. Eligible foreigners include:

• those with residence permits
• those granted permission to enter the Kingdom under the Investment Promotion Act as investors in a limited company more than 49% owned by aliens.
• foreign juristic persons with Investment Promotion Certificates
• foreign individuals or juristic persons remitting foreign currency into the Kingdom for the purchase of a condominium unit.

The remaining 51% of the condominium area must be sold either to Thai nationals or Thai corporations. In some cases, foreigners who are shareholders in legally defined Thai companies are able to acquire the Thai ownership quota in condominium projects. To avoid complications with this issue, many projects in Phuket offer condominiums on a long-term lease basis for a period of 30 years, which can thereafter be extended for two additional 30-year lease periods. This amounts to a 90-year lease.

These laws are all well known now and generally accepted in the marketplace. It’s always a good thing for developers to ensure that their sales and purchase agreements are very clear, and are understood by the buyers. The developer’s sales staff should therefore be well-versed in the application of this legislation.

A new breed of developers?

We’ve recently seen an increase in both foreign and domestic developers who have adopted a new strategy of selling to the domestic as well as the foreign market. This is already a feature in other resort destinations like Hua Hin and Pattaya. Projects with prices per square metre ranging from THB 70,000 to THB 85,000 are becoming more popular. They offer the same common facilities as developments that were previously built at a higher cost. If the project has good rental programs and is to be managed by a respected service provider, Thai investors will see it as a good choice. Phuket’s status as a mature tourist market seems assured.

Jones Lang LaSalle

Posted under Lifestyle, Property News

Often when people think about insulation they think of keeping in the heat, of cold countries and thick walls. However even in tropical climates insulation is an important part of construction and now there are new developments which mean that insulation can not only be more environmentally friendly but safer for people as well.

There are many benefits to having good insulation. It reduces heat gain in tropical climates such as Thailand. It also controls condensation which is important in a country where it rains heavily for part of the year and is humid all year round. Water stains or mould on interior lines are the most obvious sign of condensation and this means that the humid air has infiltrated the building structure.

Insulation also reduces noise levels and the strategic use of acoustic insulation is an essential part of any modern construction. For example, even the noise of rain through metal roofing can be significantly reduced by installing good insulation in the roof system.

Insulation should also help you save on energy costs. Because it reduces heat gain houses should be able to save between 30 to 50% on electricity bills.

Factors to take into account when choosing insulation include air temperature, levels of solar radiation, air movement and humidity. Tropical environments such as Thailand generate the most extreme and powerful examples of each of these factors.

Usually conventional polystyrene and polyurethane foam blends are used in insulation because of their excellent capacity to insulate, but they require petroleum for production, contain toxic chemicals and are non-biodegradable. However, more and more ‘green’ insulating products are coming onto the market.

Recycled paper insulation is currently popular in the UK and uses recycled newsprint. Over one million homes in Britain now have this type of insulation.

Hempflax insulation mostly uses hemp fibre with some added polyester fibre for reinforcing. Hemp is naturally resistant to moths and beetles so extra chemical applications are avoided.

Cotton fibres are also a popular option as they also contain no harmful chemicals. Glass fibre insulation uses up to 80% of recycled glass and has proven to be very effective.

The very latest idea is organic insulation which consists of water, flour, minerals and mushroom spores. Scientists are still testing this product but it is possible that this will be the way forward. It is cheap, easy to manufacture and completely safe for the environment and people.

Sustainable practices are the measures that satisfy the needs of people today while enhancing the quality of life for future generations. So make sure you choose insulation which is not only practical and effective, but environmentally friendly and uses up to 80% of recyclable materials in its production. After all, in Thailand everything is recycled, so it can’t be that hard.

This article is provided courtesy of Phuket Villas & Homes as part of the company’s corporate responsibility programme.

Posted under Health, Lifestyle, Property News

The home can be a toxic waste dump and cleaning products are especially responsible for creating air that is often up to ten times less clean than the air outside your front door. Floor and furniture polish contain phenol, diethylene, glycoland and other toxic compounds. Glass cleaners have ammonia, metal cleaners have phosphoric and sulfuric acid and oven cleaners contain lye. Air fresheners also contain phenol, cresol and formaldehyde. The list goes on.

The health risks of using chemically-based products include allergies, cancer, migraines and nausea. Only 7% of the three thousand chemicals produced in amounts of one million pounds a year have been fully tested. Manufacturers of cleaning compounds do not have to disclose what is in them. This means you may want to turn to more environmentally safe cleaning alternatives.

There are natural ingredients that you probably have in your fridge and cupboards which clean just as well as store-bought chemically based cleaners, and are much friendlier to the environment, not to mention your children and pets.

Vinegar, lemon and baking soda are three ingredients which separately or combined will have your house cleaned in a jiffy, smelling wonderful, and are all non-toxic.

Vinegar

This is an all-purpose cleaner. Mix a solution of one part vinegar to one part water to create a natural disinfectant and deodorizer. It is cheap and safe to use on most surfaces, however never use it on marble or on tiling as it eats away at the grout.

In the bathroom you can use it to clean the bathtub, toilet, sink and counter tops. Use pure vinegar in the toilet bowl to get rid of rings. It will remove scum and hard water stains on fixtures as it is naturally acidic.

In the kitchen it can be used on stovetops, appliances, countertops and the floor and in the laundry it is a natural fabric softener. If you add half a cup to the rinse cycle, it has the added benefit of breaking down laundry detergent more effectively.

Lemon Juice

This will dissolve soap scum and hard water deposits. It will also give a wonderful sheen to brass and copper. If you mix it with baking soda and vinegar it creates a general cleaning paste.

Mix one cup of olive oil with half a cup of lemon juice and you have a great furniture polish for hardwood furniture. A whole lemon peel in the garbage deposit freshens drains and kitchens.

Baking Soda

This is used to scrub surfaces in the same way as abrasive cleaners and is a natural deodorizer. A box placed in the fridge or freezer will absorb all odors.

In Thailand, there is a tendency to overuse chemically-based products in the home. These can not only affect the environment as a whole, with runoff into drainage systems and air pollution, but create health risks for you and your family. Natural alternatives clean just as well, are cheap, and create a much better living environment. Why not raid your cupboards and give them a try?

This article is provided courtesy of Phuket Villas & Homes as part of the company’s corporate responsibility programme.

Posted under Health, Lifestyle, Property News

As the world continues its search for viable, affordable and renewable energy sources, one type of alternative energy is of particular interest to those who live on Thai islands or in seaside resorts. Coastal areas in particular are suitable for wind power production and medium scale wind farms have already been established on Phuket and the Thai mainland. Small scale wind turbines are also being used to power everything from household appliances to shop lighting.

The market for renewable energy is growing dramatically and annual investment worldwide now exceeds US$100 billion. This of course includes solar energy, biomass, hybrid energy options and nuclear power as well as wind energy generation. Currently wind produces only one per cent of world-wide electricity, but the figure is rising rapidly. This form of power is a viable alternative to fossil fuels as it’s plentiful, can be widely distributed, and produces no greenhouse gas emissions.

Wind power is the conversion of wind energy into a useful form using wind turbines. Of course, as with any new idea, there are advantages and disadvantages. The construction of large scale wind farms is not universally welcomed due to their negative visual impact and the danger to local birds. Such farms also need a large area of land, which is not always readily available near built-up tourist centres.

However it’s generally recognized that the advantages of wind power outweigh the disadvantages as oil prices soar and coal production decreases.

In some countries, wind generated electricity is used by large companies or factories but in Thailand it’s employed on a smaller scale for homes or shops. The issue here is that the wind is of a constant, low-level nature, rather than the big gales, which are associated with other parts of the world. On Koh Lan, the Thai Windmill Energy Company has a pilot project with 40 wind turbines. It’s the first wind energy plant developed by Thai technologists and is tailored to suit local climate and weather conditions. They’ve developed wind turbines with smaller blades and thinner pillars to suit the particular weather conditions, so now villagers on this island have an alternative to diesel for their electricity consumption.

The cost of the new Thai turbines is also considerably less than normal turbines. The Thai Windmill Energy Company sells each turbine for US$10,000 compared to the usual cost of US$66,000 in America and Europe. Although wind power will never provide for all the electricity needs in Thailand, it has great possibilities for coastal regions and with Thai companies working on producing smaller wind turbines suited to the local climate, you might soon find yourself purchasing a turbine to power your own electricity needs at home. Used in conjunction with, for example, solar energy panels, this renewable resource could change the way we live and provide a cleaner environment for future generations.

This article is provided courtesy of Phuket Villas & Homes as part of the company’s corporate responsibility programme.

Posted under Lifestyle, Property News

We reported last year that the Cabinet of Thailand had resolved to reduce the registration fees payable upon the transfer of certain interests in real estate, as a measure to stimulate the real estate sector of the Thai economy. The reduced registration fees came into effect on 29th March 2008 and were initially frozen at the lower rate for a period of one year ending on 28th March 2009.
Many buyers who stand to benefit from the reduced fees and whose property is near completion, have been applying pressure upon developers to ensure that completion of their property has taken place and the registration process has been concluded prior to 28th March 2009, thus allowing them to benefit from the considerable reduction in government registration and transfer fees.
The Ministry of Finance recently reported that the reduced registration fees had stimulated the real estate sector of the Thai economy. Consequently, on 2nd December 2008 the Cabinet of Thailand resolved to approve a one year extension of the reduced fees payable on the registration of immoveable property, ending on 28th March 2010.
The reduced registration fees are applicable to land and building transfers, condominium unit transfers, the registration of buildings as condominiums and the registration of mortgages. The registration fees in relation to these transactions have been reduced from 2 percent to 0.01 percent (except mortgage registrations which have been reduced from 1.1 percent to 0.01 percent). In addition to the reduced registration fees, certain taxes payable upon the transfer of real estate have also been reduced. It is important to note that the reduced registration fees do not apply to the registration of leases or the transfer of land which has no buildings or structures built upon it.
The reduced registration fees and taxes, which may (depending upon the value of the interest transferred) amount to a saving of several thousand U.S dollars, provide prospective buyers with a valuable incentive to invest in their dream home in Thailand now rather risk considerable additional costs post 28th March 2010.

Posted under Property News

Posted under Lifestyle, Property News

While the world financial crisis rumbles stubbornly on, it looks as though the worst surprises are now behind us - and 2009 is a time for investors and smart buyers to think about the bargains to be had in markets that have reached depths never seen before. So, where do you invest your money now? A bank? Stocks? I don’t think so!

Many investors are looking for a safe haven to put their money and to receive a good return on capital. Likewise, smart property buyers are looking for a ‘good buy’ and guaranteed rental return.

Voted Nº 1 World Luxury Destination of the Year by the New York Times, Phuket - by no means immune from what’s happening around the world - still remains a relatively stable bet, largely unaffected by the mortgage crisis that has depressed property markets elsewhere.

So, this is the time to consider buying a property in Phuket. It is now (but not for long!), because of the general uncertainty around the world, a buyer’s market, presenting a real opportunity to make handsome returns on any property investment - whether for holiday, second home or for pure investment.

As an old Chinese proverb says: “The best time to invest is when there’s blood in the streets.”

(Based on a recent newsletter from Layan Gardens & Luna Phuket)

Posted under Property News

Reduced fees payable on the registration of immoveable property in Thailand have been extended until 28 March 2010, representing an opportunity for considerable savings.

The Thai government has extended the deadline for the application of reduced fees because the measure had significantly stimulated the real estate sector.

The reduced registration fees are applicable to land and building transfers, condominium unit transfers, the registration of buildings as condominiums and the registration of mortgages. The fees have been reduced from 2 percent to 0.01 percent (except mortgage registrations which have been reduced from 1.1 percent to 0.01 percent). In addition to the reduced registration fees, certain taxes payable upon the transfer of real estate have also been reduced.

It is important to note that the reduced registration fees do not apply to the registration of leases or the transfer of land which has no buildings or structures built upon it.

 Together with the property bargains available if you search the market thoroughly, these reduced fees can add up to potential savings of several thousand dollars.

Extracted from an article published in Shop WINDOW on Lifestlye and co-written by Christian Glanville, Partner of Belmont Limcharoen (Samui) and Eddie O’Shea, Senior Associate at Belmont Limcharoen (Phuket). To read the full article, go to Shop WINDOW on Lifestyle.

Posted under Property News