Offshore Savings

Offshore savings are nothing new, they have been around since the 1960s, and are named because they were established originally in the island tax havens of the Caribbean and the English Channel. Investing your money in an account other that your country of residence is what is meant by offshore saving and the benefit is that this generally means that the savings will be subject to lower taxes.

To take advantage from saving offshore the individual must either have residence offshore, or, for a resident in a high-tax area, there must be an offshore structure which distances offshore gains from the onshore tax net.

Types of Offshore Savings Accounts:

Deferred Interest Accounts – These accounts only accrue interest when you close your account, some providers also allow you to defer all of the interest. This is particularly useful as it allows planning of your tax liability over the year.

Euro Accounts – These accounts are particularly useful if you are traveling between, or planning on spending time in a European country as they allow you to make transactions in Euros.

Checklist for Offshore Savings Accounts:

•    Do they have a minimum and maximum balance?
With certain savings accounts you have to provide a minimum balance that you must invest to open the account. Alliance and Leicester’s Offshore Call Account has a minimum opening balance of £10 and a maximum balance of £1 million.

•    Do they have a limit on the number of withdrawals you can make?
Some accounts may only permit a certain number of withdrawals over a fixed amount of time, if this is exceeded then interest on your savings can be lost. It is also worth researching if you have to give notice that you are planning to make a withdrawal from your account.