Anybody have an Offshore Savings Account?

Discussion in 'General Chat' started by mjn, Mar 9, 2006.

  1. mjn

    mjn
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    Thinking of getting one, and having the interest paid back into my normal account.

    Anybody do this?

    Pro's ? Con's?
     
  2. Woodywizz

    Woodywizz
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    As far as I am aware the only reason for having an offshore savings account is to negate the tax liability on the interest paid. However, you will only be able to receive the interest gross if you fit into a certain category: ie, a non-UK national whom is resident in the UK but classed as non-domicile, or a UK national whom is not ordinarily resident in the UK.

    If you are a UK national, and are resident in the UK, then there are no real advantages in having the savings account offshore as you will raise a tax liability once the interest is paid back in to your UK account. I would be surprised if any Bank would allow you to open an account offshore if you are a UK resident and UK national - if anything they are statutorily obliged to inform the Revenue and report you for conspiring to commit tax evasion!!

    If you are trying to negate the tax liability on your savings then there are certain legal ways round this - ie. utilise your and your partners' ISA allowance; or put your savings into a non, or low rate tax payers' name - ie kids.

    Hope this helps.
     
  3. Abbeygoo

    Abbeygoo
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    Woodywizz is spot on.

    The offshore savings account should be a thing of the past as the recent EU savings tax directive basically makes the European Union one country rather than separate ones. Each member state has an agreement to pay 'witholding tax' on your savings, which can be up to 35%. I would suggest avoiding the route of offshore savings as it will not assist you in your goal. The HMRC - Her Majesty's Revenue & Customs - (new name for the Inland Revenue) website is very helpful -

    http://www.hmrc.gov.uk/esd-guidance/

    Woodywizz quite rightly suggests ISAs as a tax free interest bearing account available to each UK resident over the age of 16. The annual limit (per tax year) is £3,000 so now is a good time to open one each and contribute £12,000 in a short period of time.

    Aside from that, utilising savings in your children's names can be efficient, to a degree. Again, the HMRC have closed loopholes here and will deem the interest earned to be that of the parents in certain situations - I would say definitely so, if you have it paid into your account!

    Look towards National Savings Premium Bonds, Savings Certificates and Investment based ISAs for tax favoured returns as well as contributing to your own Pension plans.

    Failing that, look for some good interest rates on internet based accounts that still pay tax but overall pay some good rates net straight into your hand. http://www.moneyfacts.co.uk/menus/main/menu_savings.htm

    Hope this helps.
     
  4. mjn

    mjn
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    They are plenty of high street branches willing to do this! Plus if its a Swiss Account, they won't release your bank details for dodging tax, as not declaring income is not a crime in Switzerland. But i'm still reading up.

    The amount i want to save, makes an ISA not much of a prospect.
     
  5. booyaka

    booyaka
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    I would doubt that this is the case - as previously mentioned the Euorpean Savings directive (introduced 1 jan 2006) states that the HMRC can force the insurer/bank (i.e the uk bank) etc to either tax the individuals who are deemed to withhold tax or force the bank/insurer to release the names of the individuals who hold offshore savings accounts and tax them directly.

    http://www.hmrc.gov.uk/esd-guidance/uk-investors.htm

    If you wish to pm me, i may be able to suggest other options for you as i am an IFA, dealing with pensions & investment business for individuals and corporate clients.
     
  6. Abbeygoo

    Abbeygoo
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    Fancy touting for business, shame on you! The point about Swiss bank accounts is incorrect as the Euro Savings Tax Directive specifically targets this, similarly with Jersey and the Isle of Man.
     
  7. HMHB

    HMHB
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    I don't even have an on-shore savings account :rolleyes:
     
  8. Woodywizz

    Woodywizz
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    Every single High Street bank will have an international arm whom can arrange the opening of Offshore accounts. All I am saying is that if you express a desire to open an offshore account, with the sole intention of avoiding...well evading, tax on the interest - then the Bank employee is statutorily obliged to report this (Proceeds of Crime Act 2002 - which effectively extended the definition of money laundering to include tax evasion). If the Bank have this knowledge, and still proceed to open the account, then the individual employee could face a hefty fine or a period at her majesty's pleasure.

    Advice taken from most high street bank advisers should be taken with a pinch of salt, you need specialist advice from either a tied financial adviser, or from an IFA. Every high street bank will refer you to their international department, this does not mean that every High Street bank will happily let you open an offshore account and earn gross interest. After a referral to the offshore arm, the advisers there will give you guidance as to how an individual can mitigate their tax liability but will always advise you that any UK national - whom is resident in the UK - has a responsibility to declare any interest earned on Offshore investments to the appropriate tax authority. You have had good advice from myself (Premium Bank Manager - advising clients earning 100k+); Abbeygoo (Area Manager Financial Planning for major high street bank); and Booyaka (IFA) - if I were you then I would PM Booyaka or alternatively have a look at this.

    Alternatively, as we are all seemingly touting for business, then you can PM me and I may be able to help you out.
     
  9. Bl4ckGryph0n

    Bl4ckGryph0n
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    Am I correct in my understanding that although Switzerland is now not so secret anymore, there are still other 'European' locations like Luxembourg where the secrets are intact....

    The ISA option is a very limited amount, and HMRC is indeed clamping down hard on saving under the name of child as it is pretty obvious who benefits....Also there are limits on how much you can donate to your child tax-free.....

    Probably the best saving option, but that depends on your employment situation, is a private pension plan....Every £1000 per month I invest costs me about £535...Best return on investment anywhere...But you can't access it in the short term....
     
  10. Mr_Wistles

    Mr_Wistles
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    If its a decent amount why not buy premium bonds. If you can buy a decent block 15k+ (30k max) then you can get some good returns on them.
     
  11. Fat Tony

    Fat Tony
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    :nono: :suicide:
    As soon as you have the cash (interest) paid back into the 'normal account', which I assume is in the UK, it becomes taxable (as prev. posted by others).
     
  12. mjn

    mjn
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    Thanks all. Obvisously, i'm going to reveal my finances on the internet for everybody to see, but an ISA is too limited to the amount you can save, so that was the main reasons i was looking elsewhere. I'll be sending a couple of PM's i think. :)
     
  13. booyaka

    booyaka
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    sean5302 - the words "get round" etc are not ones i would be using as that is likely to be read as "tax avoidance" by the HMRC!!:rolleyes:

    The general point of the matter is that money offshore is money that can accrue intersest tax free - upon bring the money back to the uk - it is then taxed.

    for example - Offshore investment bonds etc are deemed to be tax free growth (excluding any withholding tax in the investment funds that is not reclaimable) but upon bring the cash/investment/interest back into the UK - then tax maybe/is then payable on any gains etc, dependant on your individual tax situation.

    Let's make it totally clear that all of these situation are dependant on any individuals circumstances and do not form part of any actual formal recommendations from me!! (compliance eh??:rolleyes: )
     
  14. Bl4ckGryph0n

    Bl4ckGryph0n
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    You sound like you work for them....Spelling the 'new' name right, using the compliance buzzword terms ;) Let me guess the next one will be how to delight the HMRC customers :D
     
  15. booyaka

    booyaka
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    nah - no chance!!:D Work as an IFA!!
     
  16. NinjaBrewCommando

    NinjaBrewCommando
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    Tax is a kicker, to be sure. I just looked at my wage slip and the amount paid out in tax is truly frightening.

    As a PAYE employee, the only way I have of reducing tax is by increasing pension contributions. For savings, ISAs are the best, but of course limited in the funds you can put in. I do have some premium bonds, but they haven't yielded any great returns yet (he says optimistically...)

    Didn't really have anything useful to contribute to this thread other than a cheeky request to booyaka and woodywizz - do either of you mind if I PM you to regarding some financial planning advice? Basically I'm in the market for either/both of your type of services but I don't know the best way to go about getting it, or even if it's worth it. I was hoping after a few questions, you could point me in the right direction. Cheers :smashin:
     
  17. Woodywizz

    Woodywizz
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    No problem...send me a PM:smashin:
     

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