Investing offshore is as simple, and legitimate, as any other kind of investment in managed funds - and one which is increasingly popular among a wide range of investors who want to reduce or defer their tax liability.
Virtually all the leading names in UK fund management industry operate offshore funds. These are companies with strong track records and solid financial backing, which manage assets counted in billions.
As with any investment, you need to weigh the risks and rewards: funds which invest in corporate bonds, for example, will be safer than those investing in emerging markets - but the growth prospects will be lower.
Many offshore funds are what are known as roll-ups; you buy shares in the fund, but do not receive any dividends. All the earnings - both income and growth - are accumulated, or rolled up year after year until you sell your shares. That's the point at which you have to pay tax, which will be charged at your marginal rate.
If you decide to keep your money in the UK, there are a number of options available, but you need to consider the risks involved. Some of your cash could go into an Enterprise Investment Scheme (EIS). These were introduced by the Government to replace the old Business Expansion Scheme, which had become too much of a tax dodge.
If you buy company shares via an EIS, you do not have to pay any capital gains tax if you hang on to them for at least five years. There is also income tax relief at the 20 per cent lower rate on investments up to pounds 100,000.
And if you make a loss on the deal you get relief against income or capital gains tax. Remember that companies which qualify for EIS investment are new and small, which means there is a lot of risk involved.
Venture Capital Trusts (VCTs) are also aimed at raising finance for small businesses. They are publicly quoted companies which use their funds to invest in a spread of unquoted companies. Dividends paid out by VCTs are tax free and you do not have to pay any capital gains tax when you sell your shares. Investors who buy new VCT shares also get income tax relief at 20 per cent if they hold their shares for at least five years. As with EIS schemes, you need to be aware of the risk involved in VCT investment in small, often start-up, companies.
However, with a general election due next year it's worth remembering that tax rules change frequently, and any investment you have made purely for tax reasons could quickly turn into a liability