Gross Roll-Up to Defer Tax

You may have heard of the term "Gross Roll-Up". But what does this mean to you?
How can you use it in your tax planning to defer or lessen tax liability on asset?
How does it all work?

Gross Roll-Up is a term applied to a structure, which enables you to buy and sell assets with no liability to tax on the gains at the time of disposal or re-investment.

How does this work?
Lets take a portfolio bond as an example.

Transfering your existing assets, such as cash, funds, stocks and many other assets to a portfolio bond creates an important shift in the way that ownership is defined.

Owning assets directly and disposing of these assets means that an immediate and direct profit or gain has been realized at the time of disposal, this is therefore taxed at capital gains tax rates.

Transferring your assets to a bond means that now you own the bond, and the bond owns the assets. This means that when an asset is sold or disposed of at your request, the bond has made a gain in its value, but you haven't actually realised that gain as you haven't sold or surrendered the bond itself. So no realized profits into your bank account, means no tax (for now).

In this way, gains are rolled-up. You can instruct the bond to buy and sell as many assets as you wish in order to make a profit and the bond just gains and gains in value, rather like a balloon being blown up and swelling in size.

But you're just deferring this tax until a later date right?
You've still, as an example, turned £100,000 into £250,000 and now need to be taxed on the £150,000 profit?

Well, yes and no. Portfolio bonds have a variety of ways in which they are treated differently for tax purposes and you can apply various tax credits to now lessen the liability that you have put off until the day you choose to surrender or partially surrender your bond.
To continue reading, see the articles on;
Deemed Gains
Moving Capital Gains to Income Tax and Assignment
Top Slicing and Time Apportionment