Using Offshore Finance Companies To Reduce UK Tax

A look at how you can use offshore finance companies in 2013 to reduce UK tax.

Many international groups of companies use an offshore finance company to reduce their tax burden. There’s nothing to stop other UK companies trading overseas from using a similar strategy.

In this guide we look at how this can be achieved in more detail, but in essence the aim is to incorporate an offshore subsidiary company that will be used to lend funds to other group companies. Loans will be at the market rate and the interest will usually be deductible for the trading companies that pay the interest.

By establishing the finance company offshore it is also likely to be exempt from foreign tax on the profits.