Wealth Management in Guernsey: Open-Ended Funds and Insurance Bonds

Guernsey is a Crown Dependency situated in the English Channel, with a distinct legal system drawing on Norman and English law traditions, its own legislature (the States of Guernsey), and a financial services sector that manages an estimated £300 billion or more in funds alone as of 2026. Alongside Jersey, Guernsey has been a cornerstone of UK-connected international wealth management for generations, with particular strength in fund management, insurance and insurance bond wrappers, and trust services for private clients.

This guide examines Guernsey's key offerings for HNW individuals and families, focusing on fund structures, offshore insurance bonds, and the trust and fiduciary services sector.

Guernsey's Tax and Regulatory Position

Like Jersey, Guernsey levies no capital gains tax, no inheritance tax, and no value added tax. Income tax on locally based individuals is charged at a flat 20% on Guernsey-source income. For internationally structured holding vehicles — trusts, companies, funds, and insurance arrangements domiciled in Guernsey — investment returns and income from non-Guernsey assets are not subject to Guernsey tax at the vehicle level.

The Guernsey Financial Services Commission (GFSC) is the island's integrated financial regulator, responsible for banks, investment businesses, insurance companies, fund managers, and fiduciary service providers. The GFSC maintains a strong international reputation and Guernsey is on the OECD white list of cooperating jurisdictions. Guernsey participates in CRS and exchanges financial account information automatically with over 100 jurisdictions.

Post-Brexit, Guernsey lost EU marketing passporting rights for its investment funds. However, Guernsey retains access to EU markets through national private placement regimes (NPPR) in most EU member states, allowing Guernsey funds to be marketed to qualifying professional investors in the EU. Guernsey also has a bilateral arrangement with the UK under which Guernsey UCITS-equivalent funds can be distributed in the UK.

Open-Ended Fund Structures

Guernsey is one of Europe's leading fund jurisdictions. Its funds industry spans closed-ended listed investment companies (many of which are listed on the London Stock Exchange), open-ended collective investment schemes, private closed-ended funds, and a growing private credit and real assets sector.

Authorised Collective Investment Schemes

Open-ended funds authorised by the GFSC can be marketed to the public in Guernsey and, subject to appropriate documentation, to qualifying investors in other jurisdictions. The most widely used vehicles are:

• Open-Ended Investment Companies (OEICs): corporate structures with variable capital, commonly used for institutional and HNW investor funds
• Unit Trusts: traditional pooled investment vehicles for private clients, often used for offshore investment purposes
• Guernsey ICC (Incorporated Cell Companies) and Protected Cell Companies (PCCs): umbrella structures with legally separated cells for different asset pools or investor groups

Registered Funds for Private Investors

Guernsey's registered fund regime provides a lighter-touch regulatory framework for funds that are only available to qualifying investors (typically HNW or professional). Registered funds require registration with the GFSC (rather than full authorisation) and must have a GFSC-licensed manager. They offer faster time to market and reduced regulatory burden, while still providing investors with an appropriate level of oversight.

Offshore Insurance Bonds

Guernsey has a long history as a domicile for life and general insurance companies. The offshore insurance bond — sometimes called an investment bond, unit-linked insurance bond, or portfolio bond — is a life insurance policy issued by an offshore insurer that wraps an investment portfolio. The policyholder (typically the HNW individual or their trust) is the life assured and the beneficial owner of the policy's cash value.

How Offshore Bonds Work

Under an offshore insurance bond, the policyholder's funds are held by the insurer in a notional segment. The insurer invests those funds as directed by the policyholder or their appointed investment manager. The policy generates returns in the form of insurance benefits rather than investment income or gains in the conventional sense.

The insurance wrapper means that:

• Within the bond, investment switches, rebalancing, and realisation of gains can occur without creating an immediate tax event for the policyholder (tax is deferred until withdrawal or encashment)
• The 5% annual withdrawal allowance (under UK rules) allows policyholders to withdraw up to 5% per annum of the original invested premium on a cumulative basis without creating an immediate UK income tax charge, deferring the tax liability
• On encashment, any gain within the bond is charged to UK income tax (not CGT) as a "chargeable event gain," but top-slicing relief may reduce the effective rate by spreading the gain over the years the policy was held
• For non-UK residents at the time of encashment, UK chargeable event gain rules may not apply, depending on the double tax treaty position

Offshore bonds are therefore a tax-deferral and tax-planning tool rather than a tax exemption. They are most valuable for:

• Higher and additional rate taxpayers who expect to be basic rate taxpayers (or non-UK residents) when they encash the bond
• Internationally mobile individuals who can time the encashment to coincide with a period of lower-tax residence
• Trust planning: bonds held within UK discretionary trusts can provide trustees with a controlled distribution mechanism

Offshore Insurers and Guernsey's Position

It is worth noting that several of the best-known international "offshore bond" providers serving UK-connected clients — such as RL360, Utmost International (formerly Quilter International), and Friends Provident International — are in fact domiciled in the Isle of Man rather than Guernsey, and the Isle of Man and Dublin are the dominant centres for unit-linked personal portfolio bonds. Guernsey's distinctive insurance strength lies more in its broader life and general insurance, reinsurance, and captive insurance sectors. Guernsey-licensed insurers are regulated by the GFSC and subject to risk-based capital adequacy requirements under Guernsey's insurance law. Where an insurance bond is written by a Guernsey-licensed insurer, policyholders' funds are ringfenced from the insurer's own assets, providing protection in the event of insurer insolvency.

Trust and Fiduciary Services

Guernsey has a highly experienced trust and fiduciary sector, broadly comparable to Jersey but with a somewhat different mix of specialist service providers. Guernsey's trust law is set out in the Trusts (Guernsey) Law 2007, which, like Jersey's legislation, provides clear statutory provisions including reserved powers trusts, firewall protections, purpose trusts, and protector provisions.

Key differences from Jersey include:

• Guernsey's trust law expressly provides for non-charitable purpose trusts, which can be established for purposes other than the benefit of identifiable beneficiaries, useful for complex holding structures (the dedicated statutory "STAR" purpose-trust regime is a feature of Cayman Islands law, not Guernsey law)
• Guernsey's foundations were introduced under the Foundations (Guernsey) Law 2012, providing similar functionality to Jersey foundations
• Guernsey is historically stronger in insurance-linked investments and captive insurance structures, reflecting the island's insurance heritage

Family Office Services

Guernsey has developed a meaningful family office service sector, hosting a number of multi-family offices and specialist administrators serving HNW families. For very large family offices, Guernsey offers the regulatory environment and professional depth to establish single-family office entities, though the critical mass of professional talent is somewhat smaller than Jersey or London.

Substance and Compliance

Guernsey introduced substance legislation for certain categories of entity (including pure equity holding companies, financing vehicles, and banking businesses) in 2019 and beyond. Guernsey entities claiming tax benefits must have genuine substance — adequate staff, premises, and management decision-making on the island.

International exchange of information is comprehensive: Guernsey participates in CRS, has automatic exchange agreements with over 100 jurisdictions, and cooperates with HMRC under the UK-Guernsey agreement. Investors in Guernsey funds and policyholders of Guernsey insurance bonds should assume that their account information will be reported to relevant tax authorities.

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This guide is for educational purposes only and does not constitute regulated financial, tax, or legal advice. Guernsey law and regulations change; seek qualified advice in all relevant jurisdictions. Investments can fall as well as rise in value.

How Global Investments Can Help

Global Investments advises HNW families and internationally mobile individuals on the use of Guernsey structures — including open-ended funds, insurance bonds, and trusts — as part of their broader wealth planning. We understand the specific advantages and limitations of Guernsey vehicles and how they interact with UK, EU, and other international tax and regulatory requirements.

We work with GFSC-regulated trustees, fund managers, insurers, and legal advisers in Guernsey to ensure that any Guernsey-based element of your wealth structure is properly implemented and maintained. Contact us to discuss your requirements.