Offshore Savings

[meatboy]

something which i have never had to do before i now find i have to go down this road,what are the pro's and con's off useing an off shore bank for savings where you can recieve the interest paid annually.

[Darrel]

Assuming you mean the IOM or CI, the main disadvantages are that interest rates tend to be lower than UK onshore deposits (this often wipes out the tax advantage) and the offshore deposit protection is only 50K instead of the 85K you get onshore. Personally I have my doubts about the IOM or CI schemes actually having the resources to pay out in case of a large-scale collapse.

About the only advantage is that interest is paid gross automatically without having to fill in an R105. And offshore banks are probably more accustomed to dealing with people living overseas than most bank branches onshore.

Personally I have been progressively moving as much as possible back onshore, to avoid the disadvantages mentioned above.

[PattayaParent]

Assuming you mean offshore UK in IoM or CI.

Pros - interest paid gross without needing to fill in forms. (monthly interest options are also available)

Cons - Interest rates can be lower than onshore UK where you can get gross payments if you fill in some forms.

Deposit compensation guarantee is 50k Quids compared to 85k onshore.

Edit: I see Darrel just beat me to it!

Edited July 6, 2012 by PattayaParent

[meatboy]

thanks for that guys,we both have bank accs.in the uk but we are classed as non residents therefor we canot hold [want fixed term bonds] these.the wife has a personel allowance so she can earn £8500 tax free per year interest.the trouble is our banks interest rates on offer to us are crap.2.75% while lloyds tsb offshore 3year bond is 4%.

[Darrel]

thanks for that guys,we both have bank accs.in the uk but we are classed as non residents therefor we canot hold [want fixed term bonds] these.

Yes you can. Look a bit harder. There are quite a few long-term and short-term deposits available to non-residents onshore.

[AnnyLing]

thanks for that guys,we both have bank accs.in the uk but we are classed as non residents therefor we canot hold [want fixed term bonds] these.

Yes you can. Look a bit harder. There are quite a few long-term and short-term deposits available to non-residents onshore.

Meatboy talks about bonds, you talk about deposits. But whatever, both of you are wrong.

[Darrel]

Meatboy talks about bonds, you talk about deposits. But whatever, both of you are wrong.

Really? Does that mean that all my existing onshore accounts paying gross interest are just figments of my imagination?

[PattayaPhom]

After the latest bout of photocopying money by Sir Swerving King I would get it as far away from the UK as possible.

[AnnyLing]

Meatboy talks about bonds, you talk about deposits. But whatever, both of you are wrong.

Really? Does that mean that all my existing onshore accounts paying gross interest are just figments of my imagination?

You were wrong mixing up cash and bonds. Meatboy was wrong because there are no limitations for UK non-residents holding fixed term bonds, example holding Lloyds TSB onshore in UK.

Lloyds *offshore* bonds do not exist. A UK citizen has to prove to his UK domestic bank where he keeps his portfolio that he is indeed not resident, otherwise tax is withheld. Once his status is established and accepted by his bank, all coupons are paid gross. As simple as that.

[AnnyLing]

After the latest bout of photocopying money by Sir Swerving King I would get it as far away from the UK as possible.

A wise decision to avoid hassle.

[chiang mai]

Meatboy talks about bonds, you talk about deposits. But whatever, both of you are wrong.

Really? Does that mean that all my existing onshore accounts paying gross interest are just figments of my imagination?

You were wrong mixing up cash and bonds. Meatboy was wrong because there are no limitations for UK non-residents holding fixed term bonds, example holding Lloyds TSB onshore in UK.

Lloyds *offshore* bonds do not exist. A UK citizen has to prove to his UK domestic bank where he keeps his portfolio that he is indeed not resident, otherwise tax is withheld. Once his status is established and accepted by his bank, all coupons are paid gross. As simple as that.

Except Lloyds TSB onshore will not sell bonds to non-residents.

Edit for spelling

Edited July 6, 2012 by chiang mai

[meatboy]

lloyds fixed bonds onshore uk are i repeat are not available to non residents,what are available is lloyds tsb offshore fixed bonds,how do i now i have just spoken to them 5pm thai time.4% fixed for 3years paid gross.

[fletchsmile]

Somewhat surprised that people have posted that offshore rates aren't as good as onshore. Not sure which banks you are using, but traditionally UK offshore locations have tended to offer better rates (comparing gross v gross), with reasons given such as lower overhead, less regulation etc.

I would suggest googling onshore vs offshore interest rates. Places like wiki show advantages vs disadvantages and there are loads of interest rate comparison sites where you can look at onshore vs offshore.

Money facts is also a useful website, and this one explains a little about offshore banking pros and cons and why rates can be better. The main disadvantage in my view is less security, including things like guarantees

http://moneyfacts.co.uk/compare/offshore/best-sellers-savings/

[Darrel]

You were wrong mixing up cash and bonds. Meatboy was wrong because there are no limitations for UK non-residents holding fixed term bonds, example holding Lloyds TSB onshore in UK.

Lloyds *offshore* bonds do not exist. A UK citizen has to prove to his UK domestic bank where he keeps his portfolio that he is indeed not resident, otherwise tax is withheld. Once his status is established and accepted by his bank, all coupons are paid gross. As simple as that.

So much of this is wrong that it's hard to know where to start.

I did not mix up cash and bonds. I was referring to bank deposits of whatever duration and I was careful to say so.

There are restrictions about non-residents making bank deposits onshore, and these are entirely down to the banks in question. Some accept them and some don't. It's their decision.

Lloyds Offshore do indeed sell what they refer to (erroneously) as bonds and these are available to non-residents. Actually the rate they currently pay is quite reasonable for an offshore product.

A non-resident has to complete a form R105 in order to have interest paid gross by UK onshore deposit-takers, but not all of them will accept these. Prior to April 2012 it was possible to subscribe to fixed-term deposits of less than 5 years' duration that would be paid gross regardless of the residential status of the holder, but this option no longer exists. However, many deposit-takers will still accept form R105 and pay gross interest accordingly regardless of the duration of the deposit. This includes "instant access". If the relevant form (R105 for non-residents or R85 for residents) is not completed it is not legal for onshore deposit-takers to pay interest gross.

It is a legal requirement of all onshore UK deposit-takers to ensure that clients provide satisfactory proof of ID and address, but this has nothing whatsoever to do with paying interest gross. The legal requirement for UK deposit takers to "know their customer" is to do with money-laundering, no more.

So, to sum it all up, you don't have a clue. As simple as that.

[Darrel]

Somewhat surprised that people have posted that offshore rates aren't as good as onshore. Not sure which banks you are using, but traditionally UK offshore locations have tended to offer better rates (comparing gross v gross), with reasons given such as lower overhead, less regulation etc.

This used to be the case but has not been so for several years. I doubt that the old days will ever return, but who knows?

If you compare current rates onshore and offshore (using, for example, the URL you quoted) you should find that with very few exceptions offshore accounts pay approximately the same gross interest rate as a similar account would pay net onshore. Many offshore accounts actually offer very poor rates at the moment, far worse than you can find onshore.

And of course the number of offshore deposit-takers has reduced dramatically over the last few years, thus reducing competition and encouraging even lower rates.

[chiang mai]

Somewhat surprised that people have posted that offshore rates aren't as good as onshore. Not sure which banks you are using, but traditionally UK offshore locations have tended to offer better rates (comparing gross v gross), with reasons given such as lower overhead, less regulation etc.

I would suggest googling onshore vs offshore interest rates. Places like wiki show advantages vs disadvantages and there are loads of interest rate comparison sites where you can look at onshore vs offshore.

Money facts is also a useful website, and this one explains a little about offshore banking pros and cons and why rates can be better. The main disadvantage in my view is less security, including things like guarantees

http://moneyfacts.co...ellers-savings/

The rates offshore for longer term bonds are better than onshore, shorter term products, instant access etc are however worse.

[Darrel]

The rates offshore for longer term bonds are better than onshore, shorter term products, instant access etc are however worse.

I would say that short rates are worse offshore and, since very recently, some long rates are the same. Previously they were all worse.

Even today, no "best" rate that I know of is higher offshore than onshore and if one disregards LloydsTSB Offshore (who, I suspect, have reasons for recently increasing their rates) offshore rates are quite poor.

[meatboy]

one thing i was told by the offshore bank was they will not except anyone who is a thai national,what is that all about? as my wife has a british passport didnt matter.

[chiang mai]

one thing i was told by the offshore bank was they will not except anyone who is a thai national,what is that all about? as my wife has a british passport didnt matter.

I think this has to do with the money laundering aspect of the new legislation that is planned for Thailand, there's a shed load of hot money in Thailand and banks in the IOM/CI are afraid to get caught holding any.

[AyG]

Just a few random points:

1. Not all UK banks will accept an R105. Nationwide, for example, doesn't.

2. Banks' use of the term "bond" is inaccurate. They are fixed term deposits, not bonds.

3. By having your money offshore, in the event of one's death, if one is not UK-domiciled, the money is not subject to UK inheritance tax.

[Darrel]

one thing i was told by the offshore bank was they will not except anyone who is a thai national,what is that all about?

Try a different bank. Some of them have very odd rules that make no sense at all.

[chiang mai]

Just a few random points:

1. Not all UK banks will accept an R105. Nationwide, for example, doesn't.

2. Banks' use of the term "bond" is inaccurate. They are fixed term deposits, not bonds.

3. By having your money offshore, in the event of one's death, if one is not UK-domiciled, the money is not subject to UK inheritance tax.

1. The major Banks will accept R105, Building Societies will not, Nationwide is a Building Society.

3. If one is not UK domicilied your estate is not subject to UK IHT, even if there are funds invested osnhore UK. The problem is in ensuring that one is not UK domiciled and this is actually quite difficult to achieve, HMRC will not say, issue a certificate beforehand that says you've achieved non-dom status, it's all down to their opinion once you are dead. Only those people currently paying the non-dom tax charge each year are truly is the clear on this point.

[AnnyLing]

Meatboy talks about bonds, you talk about deposits. But whatever, both of you are wrong.

Really? Does that mean that all my existing onshore accounts paying gross interest are just figments of my imagination?

You were wrong mixing up cash and bonds. Meatboy was wrong because there are no limitations for UK non-residents holding fixed term bonds, example holding Lloyds TSB onshore in UK.

Lloyds *offshore* bonds do not exist. A UK citizen has to prove to his UK domestic bank where he keeps his portfolio that he is indeed not resident, otherwise tax is withheld. Once his status is established and accepted by his bank, all coupons are paid gross. As simple as that.

Except Lloyds TSB onshore will not sell bonds to non-residents.

Edit for spelling

Lloyds TSB does not *sell* bonds. Loyds TSB *issues* bonds which are traded at the London Stock Exchange, at a dozen other exchanges, as well as *over the counter*.

I am withdrawing now from this discussion and leave any lectures to experts like Darrel who seem to get their *clues* by wasting time opening a dozen bank accounts to squeeze the last fraction of yield percentage for their cash.

[chiang mai]

Correct, a pedantic terminology correction for a forum such as this but technically correct neverthless. But wait, is that it, is that your only argument you can/want to make, disappointing.

[AyG]

3. If one is not UK domicilied your estate is not subject to UK IHT, even if there are funds invested osnhore UK.

Not correct. According to the HMRC wesite:

"If you are domiciled abroad, inheritance tax applies only to your UK assets."

http://www.hmrc.gov.uk/cto/customerguide/page20.htm#7

[fredob43]

The only UK bank that I found that gave me a problem regarding bond's, 'if you live over sea's' is/was HSBC all the rest I have had no problem with the last time I looked a month or two ago Santander was offering 4% for a two year bond's Issued or sold (No one like's a smart S/Arse)

Edited July 7, 2012 by fredob43

[chiang mai]

3. If one is not UK domicilied your estate is not subject to UK IHT, even if there are funds invested osnhore UK.

Not correct. According to the HMRC wesite:

"If you are domiciled abroad, inheritance tax applies only to your UK assets."

http://www.hmrc.gov....de/page20.htm#7

I stand corrected.

[howzat]

How about premium bonds. Can a british non uk resident purchase

[Darrel]

I am withdrawing now from this discussion and leave any lectures to experts like Darrel who seem to get their *clues* by wasting time opening a dozen bank accounts to squeeze the last fraction of yield percentage for their cash.

Hmm. The time I wasted on looking for better rates and less withholding tax earned me in extra interest alone last year an amount that far exceeded my entire yearly expenditure. And all that over and above what I might have got had I not moved my money around. I do however understand that for some people here such a small return would not be worth devoting a few hours to.

As a result of that minimal effort most of my cash is now tied up for between 3 and 5 years at rates that I think will probably not be equalled during that time. It is all paid tax-free and all covered by a deposit protection scheme that has a good chance of paying up in if needed. Of course as older deposits mature I am always looking for places that offer better returns and so I keep my eye on developments.

To me it makes sense to get the best rate possible.

[Darrel]

How about premium bonds. Can a british non uk resident purchase

Certainly. The maximum holding is GBP30K and you need some sort of UK banking to buy/sell.

www.nsandi.com