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Accounts
Bank and Building Society
Accounts
OFFSHORE BANK
(Also called Gold Independent Reserve)
An account where you pay in by post and withdraw by post or by immediate credit to a bank account for a charge. The account is held at a bank in the Isle of Man, Guernsey, Jersey or further afield. Higher rates of interest for larger sums. Some accounts are exclusively for expatriates and may pay higher interest. Some pay interest on 6 to 30 April so delaying collection of income tax for a year. Some are also available in US$ and Euros €.
Who can invest Anyone.
How worthwhile Good value for non-taxpayers not eligible to have interest in a UK bank or building society paid with no tax deducted. Good value for higher rate taxpayers for accounts with interest paid in April. However Bank and Building Society On-line Deposit Account may pay higher rates: the best onshore on-line deposit accounts usually pay ½% to ¾% more interest than the best offshore accounts in sterling but do not offer electronic transfer out of the account which saves (usually 3-4 days) loss of interest when a cheque is cleared for a large amount. You can invest in this type of account held in US$; compare a US$ investment with Offshore Single Currency Fund. You can also invest in Euros €. At present (January 2002) US$ pay the least interest.
Minimum £500-£15,000. Some have minimum transaction of £500.
Maximum £250,000 to £3 million.
Suitable Lump sums.
Money back By post or for large amounts directly credited to a bank account for a charge. Woolwich Guernsey offers a debit card.
Interest Variable. More interest paid over £5,000, £10,000, £25,000, £50,000, £100,000, £250,000. Similar tiers for US$ and € accounts. These accounts usually pay less than onshore accounts and € and $ accounts pay very poor interest.
Interest paid Usually yearly. By cheque to you; direct to a bank account; or left to accumulate.
Tax Not deducted. Taxpayers are liable to pay income tax on the interest which should be declared on a tax return. Basic taxpayers pay 20% tax. Higher rate taxpayers pay 40%. See also new rules.
Fees to pay Usually none. Northern Rock Euro € Account 7 days loss of interest. Woolwich Guernsey charges £2 or US$4 or €4 for each debit card withdrawal outside the British Isles. Other companies with debit cards may also have transaction charges.
Passbook Or statements sent.
Children Suitable for gifts from grandparents or gifts which are expected to be accumulated as a bare trust.
Risk Full value of original investment returned on withdrawal. Some UK bank and building society subsidiaries have arranged for the parent UK bank or building society to give an irrevocable and binding undertaking to discharge financial obligations of the subsidiary. Check before you invest that yours does and the arrangements don't change if a building society converts to a bank. Stay clear of banks you have never heard of unless they are wholly owned by an institution of substance. Isle of Man: 75% compensation scheme on the first £20,000 for each investor. The security of the bank may be more important than the interest rate quoted.
How to invest Visit the web site of one of the companies listed below.
Where from Best rates at for £ sterling deposits: click here if you are on-line. Banks offering US$ and Euro € accounts which usually pay very poor interest click here if you are on-line.
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Last updated 11 August 2005