The world of offshore savings accounts has always been shrouded in a little mystery as fiction writers and the press have glamourized the lives of heros and heroines whose generally underhand activities have been funded through the use of offshore accounts. But this is no longer the case. Jersey and the Isle of Man now provide homes for all of the major UK banks and building societies, all of whom are presenting portfolios of products and most of whom provide a relatively straightforward application procedure. Though British expats may be surprised to find that opening an account with an offshore branch of their own high street bank still entails a comprehensive sign-up procedure. Not least because of recent tightening of laws to prevent money laundering.
Looking through the offerings from the major high street players one can easily see that the days when putting your money offshore meant settling for a reduced interest in exchange for a little more 'flexibility' with your tax position are long gone. Now you will find that the banks and building societies are generally matching and sometimes even exceeding their UK siblings 'onshore' offers. Take for example, Bradford & Bingley. On their UK site, their esavings account offers 6.01% interest on sterling deposits. Look on their offshore (BBI International) website and you'll find that the headline rate is 6.10%. Better returns, plus the flexibility of being offshore. Its only downside is that it only operates as a linked account, that is, it sits 'behind' another account so all your deposits and withdrawls need to come to and from the account via another account in your name. Be aware too that this linked account has to be with one of the clearing banks if it's located in the Isle of Man or Jersey. Strangely enough, even though Bradford and Bingley themselves use a clearing bank to manage all their funds, they will not allow a linked account to be with an institution (ie Nationwide International) that operates in the same way. Another account that's offered by one of the high street majors that's worth noting is an American dollar account with the Bank of Scotland…not to be confused with the Royal Bank of Scotland. This Bank of Scotland account is paying 5.5% on US dollars, not far behind the interest rate for sterling. With the US dollar hitting a record low against sterling, we imagine that Bank of Scotland are working hard to try and pick up funds being exchanged while the rate is good. There are even seen signs of the current UK high street offer of 100 pounds for new account holders being used to entice people with the appropriate tax status into offshore savings. HSBC have this offer at the time of writing.
When looking through the offshore savings accounts on offer, it's important to check the current legislation, not least the European Savings Directive. Most of the major players include a clear statement of the implications of this tax ruling (that was introduced in 2005) on their websites. But, to cut to the chase, it essentially is a co-operative agreement between European countries to with-hold interest for any individual who resides with the European community. If you are resident outside the community, the ruling doesn't affect you.
So, if you're a British expat, or a non-British national, have a look at the world of offshore savings accounts. You may be surprised and delighted to find what's on offer in the ever-more-mobile world of the 21st century.