Offshore Savings Accounts

DampCat

DampCat

DampCat

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Leafy Cheshire
Hola

I'll be moving away in a few weeks and working/living abroad. I'm leaving one of my UK accounts open (it will recieve a standing order or similar) to ensure any loose ends can be taken care of, and that I have something if i need to return in an emergency.

I was talking to a colleague about a savings account that i would deposit into from my salary, and he said that a UK account would be taxed after 1 year even when working abroad (i have no idea if this is try, hence my posting here) and advised opening a savings accounts offshore somewhere like Jersey, Guernsey or Lichtenstein (?!).

Is he talking testes? Or is it worthwhile looking into it? Does anyone here do similar? I could open a savings account where i'm going, of course, but it'll operate under Sharia banking so there will be no interest (from my research so far). I'm planning to submit a large percentage of my salary to it so interest would be nice, but i dont want to give too much away to the tax man either.

Also... this is perfectly legal, right? I can keep my money wherever i like, correct?
 
It depends how you're registered in the country you're moving too: check if they have a double-taxation agreement with Britain, if they don't you could be in for a world of hurt.

If you're in Britain for an average of 90 days a year Britain can (and probably will) claim you as a tax resident and charge you.

You'll need to register as a non-domicile to avoid paying full capital gains/income tax. Individuals resident but not domiciled in the UK are only chargeable to offshore income and capital gains to the extent that the income or gains are remitted to the UK, so if you're going abroad on a work visa, rather then becoming a citizen of whichever country, you'll could still be paying non-domicile tax.

The most important thing to remember is that anything in this country will be taxed at source, eg if you leave a house behind and rent it out, or have savings accounts here.

Bear in mind, in the year you move abroad if you've been in full time employment you can claim back whatever is left of your personal tax allowance (£6,475 spread over the 12 months). And you can claim a National Insurance rebate, but this must be done before you move abroad.

Your friend, however, is talking nonsense from your point of view as you will no longer be a British [tax] resident. You will have a current account in your country of residence, and be taxed at source. As for savings, if you wish to open a savings account in random country to pay in from wherever it is you're going, you will be taxed in random country at source.
 
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I'm not sure about the one year thing I thought that you got taxed on your savings interest in the UK irregardless of employment status and source of the money.

I am not sure how easy it is to open accounts in Jersey & Guenesy etc but I know a lot of offshore tax havens are stricter due to all the legislation being forced through for transparency. In Gibraltar for example you need to provide proof of residence before any of the banks / building societies will let you open an account with them.
 
platypus said:
It depends how you're registered in the country you're moving too: check if they have a double-taxation agreement with Britain, if they don't you could be in for a world of hurt.

If you're in Britain for an average of 90 days a year Britain can (and probably will) claim you as a tax resident and charge you.

You'll need to register as a non-domicile to avoid paying full capital gains/income tax. Individuals resident but not domiciled in the UK are only chargeable to offshore income and capital gains to the extent that the income or gains are remitted to the UK, so if you're going abroad on a work visa, rather then becoming a citizen of whichever country, you'll could still be paying non-domicile tax.

The most important thing to remember is that anything in this country will be taxed at source, eg if you leave a house behind and rent it out, or have savings accounts here.

Bear in mind, in the year you move abroad if you've been in full time employment you can claim back whatever is left of your personal tax allowance (£6,475 spread over the 12 months). And you can claim a National Insurance rebate, but this must be done before you move abroad.

Your friend, however, is talking nonsense from your point of view as you will no longer be a British [tax] resident. You will have a current account in your country of residence, and be taxed at source. As for savings, if you wish to open a savings account in random country to pay in from wherever it is you're going, you will be taxed in random country at source.
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Brilliant info, thanks.

I will be on a work visa. I will have a local driving licence but still operate a UK passport as an expatriot so presumably i'm then eligible to pay non-domicile tax? I wont be in the UK for 90 days in a year. I only get 4 weeks holiday ;)

I will not be paying income tax in my new job. If this is paid into a local bank and then transferred in part to seperate accounts in the UK (one savings, one current for leftover bills), what are the taxes i have to plan for?

Also... the yearly tax and national insurance thing. I'll be off in 6 weeks (end of feb). Does that mean what's left over is what's left of the financial year (ie.. April?) That i'm elligible for a return of 3 months of tax?

And yup, i will talk to someone in the relevent place, i just cant do it here while i sit at work ;) thoguth i'd ask in the mean time.
 
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Ah i see from this page that i will become a Non-Resident. There's no double taxation agreement in place, however, I will only be taxed on the interest i earn on the UK current account (which wont be much). I have no other forms of income in the UK or any investments.

I think that's correct? In that case, then, it might be prudent to run the savings account locally, rather than in the UK. I wont gain interest, but then I wont be taxed on it either. Although... the interest will be higher than the tax so it WOULD still make sense to run the savings in the UK... oh god. Maybe i'll get an ISA or something.

I also have a P85 now to fill in and claim back any Tax and NI i'm owed. Thanks for that, iw ould have never known. 2 months tax return is better than a swift kick in the ovaries, eh?
 
DampCat said:
Brilliant info, thanks.

I will be on a work visa. I will have a local driving licence but still operate a UK passport as an expatriot so presumably i'm then eligible to pay non-domicile tax? I wont be in the UK for 90 days in a year. I only get 4 weeks holiday ;)
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Yes, you will then be a non-domicile.

I will not be paying income tax in my new job. If this is paid into a local bank and then transferred in part to seperate accounts in the UK (one savings, one current for leftover bills), what are the taxes i have to plan for?
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Lucky you! Firstly you will be charged by your account provider a fee for paying in a foreign currency, and then a conversion fee unless lucky. You will then be taxed 'at source', since the payment is coming from outside the UK, it will be on whatever is in the account(s) rather then what you're payed.

Also... the yearly tax and national insurance thing. I'll be off in 6 weeks (end of feb). Does that mean what's left over is what's left of the financial year (ie.. April?) That i'm elligible for a return of 3 months of tax?
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End of Feb to April = 2 months, no :p? Basically, depending on how much you have paid already (you can claim a percentage back; I'm not 100% sure on the figures (for tax and NI) so won't give them.
 
Yeah sorry, i ninja edited April as i originally put May, then forgot to change it to 2 ;)

I have the choice to be paid in either local, $ or £ into either a local or UK account. I assumed, since i wont be taxed on income, it would make more sense to get paid local into a local account, THEN transfer it.

I'm not trying to get out of paying tax, you understand, I'm just trying to be smart with the money :)

And thanks for the explanation. I think that's the best way then. I'll get some tax on the transfer into the UK accounts but ultimately the interest on the savings and the protection (50k gurunteed, or 100% if i go to Northern Rock ;)) will make it worthwhile.
 
Have you looked at what the salary is in US$? With the exchange rate at £1.62$ currently, you might end up earning more if you're paid in US$ after the fees taken by your bank. And given that some time soon we will hopefully start to crawl out of recession, you might start to earn even more.

Of course this is speculation, so get proper advice ;).
 
are you never going to return to the UK?

You can pay 600 and something quid a year and keep your pension going even when outside the UK by paying volontary contrubutions. I left UK in 97 and just claimed most tax back etc but it would have been better to keep the NI payments going for my pension.

Watch out for this as they don't count partial years. Thus I paid until FEB but my last year doesn't count for my pension years so I only have 7 instead of 8 :( it would only have cost me around 45 quid at the time to finish the year. Worth talking about that to the pension service as well.
 
platypus said:
Have you looked at what the salary is in US$? With the exchange rate at £1.62$ currently, you might end up earning more if you're paid in US$ after the fees taken by your bank. And given that some time soon we will hopefully start to crawl out of recession, you might start to earn even more.

Of course this is speculation, so get proper advice ;).
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Yeah i appreciate your help though. I'll find an advisor before I do anythign solid.

Local is tied directly to the $ anyway, so any exchange rate between the $ and £ will directly affect my income as it stands. I hope :)


jas72 said:
are you never going to return to the UK?

You can pay 600 and something quid a year and keep your pension going even when outside the UK by paying volontary contrubutions. I left UK in 97 and just claimed most tax back etc but it would have been better to keep the NI payments going for my pension.

Watch out for this as they don't count partial years. Thus I paid until FEB but my last year doesn't count for my pension years so I only have 7 instead of 8 :( it would only have cost me around 45 quid at the time to finish the year. Worth talking about that to the pension service as well.
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I will eventually return to the UK jas but I'm under no illusions about my pension. I've only worked for 7 years whilst paying NI so it's not really worth £600 annualy to keep that going. I'll speak to them anyway, but at this stage i dont think it's something i'll worry about continuing.
 
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