Following guidance from HM Revenue & Customs, under certain circumstances, advisory fees on several of Axa’s offshore bonds will now be taken from the life company itself rather than the policyholder’s 5% tax deferred entitlement.
All advice relating solely to the investments of the company’s Isle of Man based Evolution and Estate Planning Bonds, and its Axa Life Europe’s Selection bonds will now be considered as advice to the life company and not the policyholder.
The changes will automatically be implemented on qualifyng bonds opened after 9 May.
Unrestricted access
The company clarified that the changes will also apply to investment advice facilitated by an external manager, such as a discretionary fund manager.
Policyholders can also amend their existing charging agreements by submitting a new nomination of investment adviser form, allowing them to become compliant with HMRC’s new interpretations.
Axa went on to suggest that existing financial advisers appointed on a bond may wish to consider appointing themselves as an investment adviser for their services.
However, it added that advisers must be able to separate investment advice from other advice to make use of the changes, as only investment advice is exempt from the tax deferred entitlement.
For advice to qualify as investment advice, an adviser must prove they have the appropriate permission from the Financial Conduct Authority and be appointed as an investment adviser by completing a nomination of investment adviser form.
It is not yet known whether HMRC’s guidelines will be applied throughout the whole industry.
Ian Searle, international business development manager at Standard Life, said: “We are aware of Axa International’s communication to advisers regarding the treatment of fees on offshore bonds.
“We are currently analysing the taxation, regulatory and legal consequences of Axa’s proposed course of action and will give our view as soon as this is completed.”
A spokesperson for Skandia said: “We are waiting for HMRC to confirm how investment advisory fees should be treated for chargeable event purposes where the adviser is insurer appointed and the policyholder makes the decisions on behalf of the insurer.”
'At risk'
Last week, International Adviser revealed that Axa Wealth’s specialist sales team, which looks after the sale of offshore bonds into the UK, is set to be shrunk further.
Axa confirmed that it is from this specialist products team that two roles are “at risk”.
In a statement, the company said: “Axa Wealth is enhancing its management structure to create efficiencies to better support its adviser segments.
“We remain committed to the offshore advisory market and announced a while ago that we would evolve our business structure to offer the best support to advisers in line with the unprecedented levels of change in the industry.”
