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Do expats really need offshore accounts
| Published: | 19 Dec at 6 PM |
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Even if you’ve banked with the same high-street name for decades, your banking rights as an expat might change, making you wish you’d opened an offshore account.
If you’re moving to a country with unfamiliar or possibly less secure or efficient banking facilities, leaving your money in your home country bank account is an attractive option, but might cause problems down the line. For example, recent moves by British banks to close expat accounts have caused chaos, and UK banks have strict and very inconvenient rules about sending replacement credit cards to overseas locations.
Banking in offshore jurisdictions is as straightforward as banking in most home countries, with the advantage that most offshore help desks are definitely not located in India! For British expats, the Isle of Man banks offer a useful service as well as not deducting income tax from interest earned, and are well used to dealing with the requirements of those living overseas.
Other advantages include a range of currency facilities, useful for those who move around during their expat lives. Saving as well as borrowing in various foreign currencies is also useful for many, but another good reason offshore accounts are popular is that it can be used as proof of your non-resident status as your salary from overseas work helps demonstrate you are not working in the UK and not liable for UK income tax.
Offshore accounts are also useful for expats on closed-end contracts who will be returning to the UK at a specified time. Funds held in UK bank accounts can be moved offshore before your relocation takes place, and delaying the interest payment date until after your move will mean you receive the full amount with no tax deductions. When it’s time to return home, closing your offshore account before you leave will ensure all interest due will have been paid outside the UK tax net.
If you’re moving to a country with unfamiliar or possibly less secure or efficient banking facilities, leaving your money in your home country bank account is an attractive option, but might cause problems down the line. For example, recent moves by British banks to close expat accounts have caused chaos, and UK banks have strict and very inconvenient rules about sending replacement credit cards to overseas locations.
Banking in offshore jurisdictions is as straightforward as banking in most home countries, with the advantage that most offshore help desks are definitely not located in India! For British expats, the Isle of Man banks offer a useful service as well as not deducting income tax from interest earned, and are well used to dealing with the requirements of those living overseas.
Other advantages include a range of currency facilities, useful for those who move around during their expat lives. Saving as well as borrowing in various foreign currencies is also useful for many, but another good reason offshore accounts are popular is that it can be used as proof of your non-resident status as your salary from overseas work helps demonstrate you are not working in the UK and not liable for UK income tax.
Offshore accounts are also useful for expats on closed-end contracts who will be returning to the UK at a specified time. Funds held in UK bank accounts can be moved offshore before your relocation takes place, and delaying the interest payment date until after your move will mean you receive the full amount with no tax deductions. When it’s time to return home, closing your offshore account before you leave will ensure all interest due will have been paid outside the UK tax net.
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