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Offshore Bank Accounts
Bank
and Building Society Accounts
OFFSHORE BANK
(Also called Investment Account, Extra Interest, Monthly Income)
An account with a bank, or a branch or a subsidiary of a UK bank, or a subsidiary of a UK building society based in the Isle of Man, Guernsey or Jersey. It has a minimum investment which can be added to but notice of 30, 60, 90 or 180 days must be given to withdraw. Some pay interest in the period 6-30 April so delaying collection of income tax for a year. Some are also available in US$.
Who can invest Anyone.
How worthwhile The best of these accounts only pays 0.3% to 0.4% more currently than Offshore Bank Instant Access Account. 120 or 180 days notice not recommended.
Minimum Usually £5,000, £10,000.
Maximum £500,000 to £5 million.
Suitable Lump sums.
Money back All or part at end of notice period. Abbey National, Bradford & Bingley, Newcastle Gibralter, Northern Rock Guernsey, Portman Channel Islands, Yorkshire Guernsey allow early withdrawal with a loss of interest on the notice period. Britannia International allow balance over £10,000 at no notice with no penalty as in UK.
Interest Variable. More interest paid over £10,000, £25,000, £50,000, £100,000, £250,000.
Interest paid Usually yearly. Added to account or paid by cheque or direct to a bank account or UK account. Monthly income option at slightly lower nominal interest rate.
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 None .
Passbook Usually none. Statements sent.
Children Suitable for gifts from grandparents or ones which are expected to be accumulated as a bare trust.
Risk Full value of original investment returned on withdrawal. Some building society subsidiaries have arranged for the parent UK building society to give an irrevocable and binding undertaking to discharge financial obligations of the subsidiary. This undertaking may or may not continue once the building society has converted to a bank. Check before you invest that yours does. Stay clear of banks which 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 in the Isle of Man, Guernsey, Jersey, Alderney and Gibralter.
Where from Better rates are paid for Offshore Bank Instant Access Account. Best rates at for £ sterling deposits: click here if you are on-line. For Euro € and US $ accounts which usually pay very poor interest click here if you are on-line.
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Offshore Bank Accounts
Bank
and Building Society Accounts
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Last updated 11 August 2005