Offshore Savings Accounts Can Offer Valuable Tax Savings
ST PETER PORT, Guernsey, April 30, 2010 – 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 residents 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 (www.skiptoninternational.com/) 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 (www.skiptoninternational.com/) 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 GBP10,000 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 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 firstly be 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 GBP10,000 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.
Editor’s notes:
1) Skipton International Limited (SIL) is a wholly owned subsidiary of Skipton Building Society (SBS), the UK’s 4th largest building society with over GBP15 billion assets.
2) SIL is licensed under the Banking Supervision (Bailiwick of Guernsey) Law 1994, as amended.
3) Skipton Building Society has given an undertaking agreeing to discharge the liabilities of SIL in so far as SIL is unable to discharge them out of it own assets and whilst SIL remains a subsidiary of Skipton Building Society.
4) As a Licensed Bank in Guernsey, Skipton International Limited is a participant in the Guernsey Banking Deposit Compensation Scheme (the “Scheme”) established by The Banking Deposit Compensation Scheme (Bailiwick of Guernsey) Ordinance, 2008 (the “Ordinance”). The following is a brief summary of the Scheme, but is not intended as a substitute for the actual wording of the Ordinance, a copy of which is available on request.
– The Scheme only applies to ‘qualifying deposits’, which broadly means deposits made by natural persons for their own benefit; with a few limited exceptions such as, for example, deposits made by trustees of retirement annuity trust schemes, the Scheme does not apply to companies,trusts, partnerships or charities.
– The Scheme will provide compensation in the event that a Licensed Bank is unable to repay its depositors. Under normal circumstances, payment will be made within 3 months of receipt of a valid claim form.
– Compensation is limited to a maximum of GBP50,000 per individual claimant; in the case of a joint account each depositor would be entitled.
– Total Scheme compensation in any five year period is limited to GBP100 million. If claims exceed this cap, compensation would be reduced pro rata. The cap also means that compensation in respect of any one bank cannot exceed GBP100 million.
– The amount payable may be reduced if the Bank has any contractual right of set-off against the account. The Scheme is entitled to recover compensation from any funds subsequently paid out by the Bank.
5) Deposits made with SIL are not covered by the Financial Services Compensation Scheme established under the UK Financial Services and Markets Act 2000.
6) SIL places funds with SBS and thus its financial standing is linked to SBS. Publicly available information, including reports and accounts, is available from www.skipton.co.uk.
7) Copies of the latest SIL audited accounts are available on request.
For more information on Skipton International savings products, visit
www.skiptoninternational.com or call +44(0)1481-727374
Further information and a leaflet about the Scheme is available at:
Website: www.dcs.gg
Telephone: +44(0)1481-722756
Post: P.O. Box 380, St Peter Port, GY1 3FY
Media contacts: Please contact:
Guy Stephenson/Jennifer Duffy Nacelle Limited
Tel: +44(0)20-8333-9125, +44(0)7980-241-558
E-mail: jenny@nacelle.co.uk
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