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Offshore savings guide

Category: Offshore savings
Author: Tim Leonard
Updated: 13/03/2018

A range of offshore savings accounts are available, designed specifically for customers who prefer to keep their money outside the UK.

Here we've gathered some tips on how offshore accounts can work for you.

What are Offshore Savings Accounts?

Offshore savings accounts are run from the Channel Islands or the Isle of Man or Gibraltar.

There are various types of offshore savings accounts available, tailored to satisfy different needs, for example:

  • Euro accounts let you make transactions in euros and can be useful if you are planning on moving to a European country or if you get paid in euros. US Dollar accounts are also available.
  • Deferred interest accounts allow you to plan interest income around your tax liabilities. The majority of these accounts pay interest only upon account closure, although some providers allow you to defer all or part of your interest without the need to close the account.
  • A number of offshore account providers offer expatriate accounts. These are designed for those residing in a country other than that of their legal residence.

You can set up the accounts even if you live and work in the UK as a UK resident. Offshore savings may be notice accounts or no-notice accounts and can offer annual or monthly income (monthly income accounts may suit you if you are looking to use interest payments to supplement your regular income), and can pay fixed or variable rates of interest.

Who offers these accounts?

A range of providers offer offshore accounts, many of which are operated by subsidiaries of the major banks. However a number of providers have pulled out of the market in the last few months.

It may be possible to operate these accounts via a branch, telephone, post or online, although always check the operational details to be sure the deal suits you.

How safe are they?

The two key points to remember when considering an offshore account are:

  • Any money held in an offshore account will not be subject to the UK Financial Services Compensation Scheme (FSCS).
  • Check with the provider as to whether you will be protected by an alternative deposit protection scheme, depending on where the bank is located. You can also check here.
  • You must declare the interest gained on your offshore savings.
  • HM Revenue and Customs will dish out hefty fines to anyone they suspect of hiding taxable income.

What restrictions are there?

When looking for an offshore account, consider the same factors as you would when looking for a UK-based product. As well as the rate and investment amounts, look at whether you want to receive interest annually or monthly and whether you want a fixed or variable rate.

Check the provider's terms and conditions to avoid falling foul of any restrictions or penalties once the account is running.

What to do next?

Compare savings accounts to find the best deals using our best buy tables or whole of market offshore provider search: find the best offshore savings rates.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.