How can offshore bonds be useful for university funding?

Subject to any restrictions in the policy conditions and to provider requirements, segments of a bond can be assigned.  As the new owner is likely to be a non-taxpayer, if they’re a student, the first £11,000 (for the tax year 2016/17) of any chargeable event gain on the cash in of a segment of an offshore bond will be tax free due to the personal allowance.

The next £1000 will also be tax free due to the personal savings allowance introduced from 6 April 2016.

In addition, the £5,000 starting rate for savings will be taxed at 0%.  This means that savings up to £5,000 will be tax free.

Non-taxpaying individuals such as students, will therefore be able to take up to £17,000 of chargeable gains from an offshore bond without paying any income tax each year.

As offshore bonds grow in a virtually tax free environment, this method of paying for university fees could be very tax efficient.