Why go offshore with your Savings?

29th April 2010
  • Offshore savings accounts can offer valuable tax savings
  • Widely available to many customers with low starting balances
  • Interest can often be paid without tax
  • Guernsey is a well regulated and internationally accredited banking environment

Each year according to the Institute of Public Policy Research (IPPR), around 400,000 UK nationals move abroad to work or retire. Opening an offshore savings account could bring significant tax benefits, once they cease being UK resident for tax purposes.

Firstly, let's get rid of the age old myth that offshore banking is just for the super-rich or super-sophisticated. As Jim Coupe, commercial director, for Skipton International in Guernsey comments, "This is just not the case in today's offshore financial environment where choice of product, competitive rates and tight regulations in offshore centres such as Guernsey make it an attractive marketplace for all types of expatriates. With many familiar names in the offshore financial environment such as Skipton International Limited and of course all the main UK high street clearing banks, there is a wide range of products to choose from to suit every facet of expatriate life ? from easy access deposit accounts , sterling higher interest notice products and euro or US dollar savings accounts. With minimum opening balances starting at £10,000 in many cases, this is not a market the ordinary saver needs to feel excluded from"

For many expatriates the type of banking relationship they are going to need during their time abroad is often not available or not appropriate from the UK high street. Expat customers tend to be either retiring with capital, on short term placements for career development, or perhaps on a more attractive salary package (but possibly not the lavish salaries of previous years). Their needs are therefore different and require a different approach. Working expats will be firstly looking for a safe home for sterling or a safe place to deposit foreign earnings. International expatriates will be looking for flexibility and accessibility to match their global lifestyle, while others will be looking for tax planning advantages. Those who are retired will be looking for ways to generate a greater return on their savings, perhaps with a notice account or a fixed term bond.

Jim Coupe continues, "As the offshore subsidiary of Skipton Building Society, the 4th largest UK building society, we are committed to passing on the benefits of mutuality to our clients. That's why we consistently offer attractive rates and products to our expatriate clients, understanding their need for reliable and competitive investment products. We have just introduced our Two Year International Bond paying 3.25% gross p.a./AER. For example, or for those needing shorter term access, sterling fixed deposit rates are available from 2.25% to 2.40% gross p.a./AER. With the two year product, on balances of £10,000 plus, savers can earn 3.25% Gross p.a./AER."

Offshore residents tend to have complex, multi currency income situations and therefore require a flexible and bespoke approach to savings.

One of the potential benefits of opening a deposit account offshore is taxation planning. Whilst everyone's individual circumstances vary and customers should always seek independent tax advice from specialist and regulated advisers, when living offshore you can potentially enjoy significant tax planning and other benefits. These could include receiving gross interest on your savings and the higher interest rates that are often available from specialist savings accounts found offshore. Many expatriates simply move abroad and leave their savings in accounts that lag the market onshore, where moreover unnecessary UK tax can still be deducted, further depressing returns..

Finally, remember that offshore banking for expatriates living and working abroad is thriving - use the web to help you access and research the comprehensive services and products available to help you in your expatriate life. Don't hesitate to take advice and review your financial planning at every stage of your expatriate life.