Allan Gray | Higher discretionary allowance: The opportunity to invest more offshore

Thanks to the increase in the single discretionary allowance, from 17 April 2026, investors can use the Allan Gray Offshore Investment Platform and Allan Gray Offshore Endowment to expatriate and invest up to R2m per year offshore without having to obtain prior approval from the South African Revenue Service. This is a welcome change, giving those who wish to diversify their investments globally a greater ability to do so without having to follow what can be an administration-intensive tax clearance process. Daniel van Andel elaborates.

The single discretionary allowance (SDA) was introduced by the South African Reserve Bank (SARB) and formalised in 2008 as part of its exchange control liberalisation. Individuals are granted a new allowance each calendar year, which can be used for any offshore purpose, including offshore investing and other offshore spending, without prior approval from the South African Revenue Service (SARS).

Earlier in the year, National Treasury announced an increase in the SDA from R1m to R2m to account for inflation and currency fluctuations since it was last adjusted. If you are considering taking advantage of the increased allowance, it is important to be aware of the following:

For 2026, you can use the full R2m at your disposal, even though the change only took effect on 8 April.
The SDA is granted to South African resident individuals aged 18 and above, meaning you can consider using more than one individual’s SDA in your planning, depending on your situation and household. Although minors do not receive a full SDA, the travel allowance they receive has also doubled, from R200 000 to R400 000.
The SDA covers not only offshore investments, but also all other foreign expenditure, like credit card spend when travelling abroad, which must be factored in when deciding how much to invest.

The increase … is an exciting development for all investors wanting to streamline and simplify the process of investing in foreign currency-denominated funds.

If you are looking to invest more than R2m, you can do so by applying for a tax clearance certificate from SARS, which allows for additional offshore investment of up to R10m annually. This is called the foreign investment allowance. Amounts above R12m require special approval from the SARB.

Benefits of investing through the Allan Gray Offshore Investment Platform

Offshore investing is sometimes perceived as being inaccessible, complex, and reserved for the very wealthy. We have tried to address these factors by simplifying the offshore investment process and offering access to global managers at minimums that are more accessible than going to the managers directly.

Approximately 30 000 of our clients have used their own allowances to invest in foreign currency-denominated funds via the Allan Gray Offshore Investment Platform or Allan Gray Offshore Endowment, and more than 8 000 of our clients regularly contribute to their offshore investments in any given year. For these clients, and others who aim to grow their offshore portfolios, the higher allowance will help simplify the process and remove friction.

Our offshore platform allows investors to access foreign currency-denominated funds, like those offered by our sister company, Orbis. Through our offering, we aim to provide the same ease of use, value for money and service orientation that you are accustomed to from investing in local currency investment options. Some features of our service include:

You can manage your local and offshore platform investments holistically through our secure Allan Gray Online website.
Platform administration fees are based on your total investments with us across our local and offshore investment platforms.
You can make investment contributions in either foreign currency or rand. For the latter, we can facilitate currency conversions via our authorised dealer at preferential rates.

There are several reasons to consider using your own allowance to invest through our offshore platform, rather than investing in rand-denominated funds that invest in offshore assets:

You get access to a broader range of global fund managers that may not be accessible via the rand-denominated vehicles.
Investments are in foreign currency, in funds managed by a global manager, and can therefore be withdrawn and paid to an offshore bank account registered in your name.
Offshore investments are taxed differently from rand-denominated investments for capital gains purposes: Capital gains are calculated in the applicable foreign currency rather than in rand. This means that, if the rand weakens, it is more tax-efficient to be invested in a foreign currency-denominated fund, while if the rand strengthens, it is more tax-efficient to be invested in a rand-denominated fund.
VAT does not apply to the fees charged for administration and investment management, as the investments held are offshore in nature.

Through our offshore offering, we aim to provide the same ease of use, value for money and service orientation that you are accustomed to ...

Tax and estate-planning advantages of the Allan Gray Offshore Endowment

The Allan Gray Offshore Endowment, launched in 2023, is an investment-linked product issued by the Guernsey branch of Allan Gray Life Limited. This product is Guernsey-domiciled, but is integrally linked to our offshore platform offering. This means that when you invest in our Offshore Endowment, you enjoy the benefits and features described above. In addition, there are specific benefits associated with offshore endowment products:

For individual investors in an endowment, the income tax rate is fixed at 30% and the effective capital gains tax rate at 12%. By contrast, individuals can pay income tax of up to 45% and capital gains tax of up to 18% when investing in their own capacity. The product therefore becomes tax-efficient if your marginal tax rate is above 30% and can reduce tax payable by up to a third. Furthermore, the calculation, deduction and payment of any tax due are managed in the endowment, meaning that you do not receive tax certificates and do not have to account for the investment in your tax returns for income and capital gains (however, it should still reflect in your statement of assets).
Endowments offer estate-planning continuity and flexibility when it comes to the transfer of wealth to your appointed beneficiaries on your death. No offshore will is required, and executor fees do not apply, although the offshore endowment will still form part of your estate for estate duty calculation purposes. Capital gains tax is not realised and paid on your death, provided that the investment continues and is not paid out. Overall, the process allows for quicker payment of proceeds, as well as greater continuity when transferring wealth from one generation to the next.
The total value of your investment will be protected from creditors during your lifetime, provided that the endowment is issued on your life or the life of your spouse, and has been in force for at least three years.

Consider an independent financial adviser if you need more guidance

The increase in the SDA is an exciting development for all investors wanting to streamline and simplify the process of investing in foreign currency-denominated funds. We have designed the Allan Gray Offshore Investment Platform to help facilitate this journey. There are many important reasons to diversify your portfolio by investing offshore, and plenty of options available either via our offshore platform into foreign currency-denominated funds, or via investing in rand-denominated vehicles that contain offshore exposure.

There are many important reasons to diversify your portfolio by investing offshore …

You may wish to consult an independent financial adviser, who can help you determine the appropriate level of offshore exposure to meet your long-term investment goals, and help you select the offshore product and fund(s) that are appropriate for your needs and circumstances.