Offshore bond charges explained: establishment, administration, dealing and adviser fees

The four layers

The wrapper charge is what the insurer takes for issuing and administering the policy. It is the only layer specific to the bond, and the one this page is mostly about.

The investment charge is the ongoing charge of the funds held inside the bond, or the fee of a discretionary manager running a portfolio inside it. It would be paid in a general investment account too, though some bonds offer share classes that are not available to a private investor directly.

Dealing and custody are per-transaction and per-holding costs: a fee for each trade beyond an allowance of free deals, a custodian's charge per deal and a small annual safe custody percentage, and charges for things like interim valuations.

Adviser charges are what you agree with a financial adviser, and the insurer can pay them from the policy. They are the layer with a tax consequence, covered below.

A bond sold without advice has three layers; a bespoke policy of the kind described on this site usually has a negotiated wrapper charge and a manager's fee and little else. Whatever the product, the right question is the total of all four as a percentage of the fund each year, and the right comparison is against the same portfolio in a GIA with the tax it would pay there.

Three shapes of wrapper charge

Insurers offer the wrapper charge in one of three structures, and sometimes let you choose between them on the same product.

Initial charge. A one-off percentage of the premium deducted at the start. Nothing further is taken for the wrapper, though an administration fee usually continues. It suits a long holding period and penalises an early exit, because the charge has been paid whether you stay or not.

Establishment charge. A percentage of the premium taken each year, typically for five years, with an early cash-in charge equal to the establishment charges still outstanding if you surrender within that period. Each top-up premium starts its own five-year clock. It is the initial charge paid by instalments, with the same effect on an early exit.

Ongoing charge. A percentage of the fund value every year for the life of the policy, with no exit charge. It is the cheapest structure over a short holding and the most expensive over a long one, and because it is charged on the fund value rather than the premium, it rises as the fund grows.

Two published sheets, side by side

Prudential International Assurance plc in Dublin publishes a single table for its International Investment Portfolio with charges accurate as at January 2026 (product charge tables). The three options are all there. The initial charge is 2.50% on premiums from £50,000 to £99,999, 1.75% from £100,000 to £299,999 and 1.00% from £300,000, with an administration charge of £156.58 a quarter. The establishment charge is 0.60%, 0.50% or 0.30% a year of the premium for five years by the same bands, with an early cash-in charge equal to the outstanding establishment charges, and the same quarterly administration charge. The ongoing charge is 0.70% a year of fund value from £50,000 to £249,999, 0.40% from £250,000, 0.20% from £500,000 and 0.15% from £1,000,000. On all three, a delegated management charge of 0.10% a year applies where a discretionary manager is appointed, external deals cost £31.84 each beyond 20 free in the first year and 10 a year thereafter, the custodian charges £15 or £35 per deal plus 0.015% a year for safe custody, an interim valuation costs £136.17, and an overdrawn cash account is charged at the overnight rate plus 3%.

RL360 in the Isle of Man writes Oracle, a capital redemption bond with a £20,000 minimum (Oracle product guide). Its structure is the establishment model: an establishment charge of between 0.00% and 7.50% of each payment spread over the first five years and deducted quarterly, an administration charge of 0.60% to 1.20% a year on the higher of the plan value and the payment for the life of the plan, and an early exit charge equal to the outstanding establishment charge. The guide gives a range; the illustration gives your figure. RL360's PIMS portfolio bond adds a servicing charge of £125 a quarter, indexed, and dealing and custody fees of £20 and £40 a trade (PIMS fees).

We could not read Utmost International's or Canada Life International's current sheets when this page was checked, so no figures are given for them.

£1,000,000 under the three Prudential International options

The table applies the January 2026 figures to a £1,000,000 single premium with no top-ups and no early exit. The administration charge of £626.32 a year is included for the first two options, where the sheet pairs it with them. The ongoing option is shown on a fund growing at 5% a year before deducting the charge itself, since it is charged on value. Fund charges, manager's fees and dealing costs are the same under all three and are left out.

At this size the initial charge option is the cheapest beyond about eight years, and a family that intends the bond for the next generation should look at it first. The establishment option is never the cheapest here; its appeal is cash flow, not cost. And the ongoing option looks cheap for exactly as long as the fund stays small. At £100,000 the bands are different and the ranking changes, so the exercise has to be done on the actual premium. The quarterly administration charge, trivial at £1,000,000, is 0.6% a year at £100,000 and dominates the comparison there.

Adviser charges and the 5% allowance

This is the point on a charge sheet with a tax consequence. An adviser's initial fee can be paid in two ways. If it is deducted from your payment before the money goes into the bond, the premium for tax purposes is the net amount invested and nothing has been withdrawn. If instead the full amount goes in and the insurer then pays the adviser out of the policy, that payment is a part surrender: it counts against the cumulative 5% allowance and, if the allowance is exceeded, creates a chargeable event gain. HMRC set this out in its guidance following Revenue and Customs Brief 04/13 (draft guidance on adviser charging), and the manual draws the same line: fees paid by the insurer to a manager it has itself appointed to run its funds are not part surrenders, but payments the insurer makes on your behalf to an adviser under your own agreement with that adviser, funded from the policy, can be (IPTM7350).

Prudential International's sheet applies the rule exactly: a set-up adviser charge is deducted from the payment before the bond starts, while ongoing and ad hoc adviser charges are treated as withdrawals from the bond. An ongoing adviser fee of 0.75% a year therefore uses roughly 0.75% of your 5% allowance every year, leaving about 4.25% for you, and a 1% ad hoc fee in a year when you have already drawn 5% is an excess with a gain attached. Our page on the 5% allowance explains what an excess event costs. The insurer's own charges, and a discretionary manager's fee under the insurer's delegation, are not withdrawals and do not touch the allowance.

What to ask before signing

Which of the three structures is being offered, and can the others be chosen? What is the allocation rate, if the product uses one, since an allocation of 99% is a 1% initial charge under another name? What are the exit charges in each of the first five years, and do they restart with each top-up? What is the fund or manager charge, and is an institutional share class available inside the bond? What are the dealing and custody fees, and how many free deals a year? Is there a charge for switching funds, for interim valuations, for currency conversion? How are adviser charges paid, and will the adviser's fee come from the premium or from the bond? And finally, what is the total of all of it as a percentage of the fund in year one and in year ten? A sheet that cannot be summarised in that one number has not been read properly yet.

Consumer Duty and offshore insurers

The FCA's Consumer Duty, in force since 31 July 2023, requires firms it authorises to assess whether their products offer fair value to retail customers. An insurer in the Isle of Man or Dublin that is not FCA-authorised is not itself bound by the Duty; it answers to its own regulator's conduct rules. The UK adviser or platform distributing its bond is bound, and must take reasonable steps to understand the product, its target market and its value before recommending it. The FCA consulted in July 2026 on narrowing the Duty to UK-resident retail customers and clarifying who counts as a co-manufacturer (CP26/23), with final rules expected in 2027. The practical point for a buyer is that a fair value assessment of an offshore bond, where one exists, has been done by the UK distributor rather than the insurer, and is worth asking for.

Bespoke policies and the break-even test

A private placement policy does not come with a published sheet. Its wrapper charge is negotiated on the size of the premium and the complexity of the portfolio, the manager's fee is agreed separately, and the dealing and custody costs follow the custodian's tariff. The discipline is the same: get every layer in writing, add them up, and test the total against the tax the same portfolio would pay in a GIA. Our break-even calculator does that test, and our GIA vs offshore bond calculator shows the tax side on its own. Neither works out the tax when you cash a bond in; for that, the gain and the top slicing relief, use the offshore bond tax calculator. The comparison with a UK insurer's bond, where the fund pays its own tax, is on onshore vs offshore bonds.

Questions about offshore bond charges

Sources and authorities

Read as at 19 October 2026. Product figures are from Prudential International Assurance plc's product charge tables (charges accurate as at January 2026, document PIAIDD100054412) and RL360's Oracle product guide (ORC01b, September 2023) and PIMS fee page for plans from January 2024; they are quoted to show how the structures work and will change. The tax treatment of adviser charges is from HMRC's Brief 04/13 guidance and IPTM7350.

• Prudential International Assurance plc, International Investment Portfolio product charge tables, charges accurate as at January 2026 (document PIAIDD100054412, 12/2025). RL360 Insurance Company Limited, Oracle product guide (ORC01b, 09/23) and PIMS fees for plans from January 2024. Insurer documents are secondary sources quoted for product facts only.
• HMRC, Revenue and Customs Brief 04/13: draft guidance on adviser charging and life policies; HMRC Insurance Policyholder Taxation Manual, IPTM7350 (fees and part surrenders). ITTOIA 2005 s.507: the 5% allowance.
• Consumer Duty: FCA Principle 12 and PRIN 2A, in force 31 July 2023; DLA Piper, scope of the Consumer Duty; Herbert Smith Freehills Kramer, FCA consults on scope and proportionality (CP26/23); Clifford Chance, insurance simplification and Consumer Duty reforms, July 2026.

Last updated: 19 October 2026. See our editorial standards for how articles are researched and corrected.