UK onshore/offshore tax free savings

[kevkev1888]

Hi all

 

Hope someone out there can help me get my head round all this!

 

Some background

 

I have been in LOS for nearly a year now, renting my house in UK. I have just accepted an offer to sell house and am trying to work out what to do with the cash 170K.

 

I plan to stay in LOS for the foreseeable future and want to recive a monthly income from the interest.(tax free if possible!) This will be my only income allthough i plan on setting up a small bussiness in LOS for my Thai GF seperate funds available for this.

 

I am currently banking with Nationwide using my UK address that I am selling.

I do have another address i can use for corespondance in UK, my parents.

 

I understand i qualify for non-resident status is i plan to be outside UK for 330 days per tax year.

 

Have looked at both onshore and offshore accounts and interest rates seem to be much the same 6.5-6.6% fixed for 1 year paid monthly.

 

My questions are

 

1) Onshore I fill out form R85 interest is paid gross use my parents UK address. Interest paid monthly to my Nationwide account I will be drawing from ATM as i do now. This looks the most simple to set up but will I still be liable for Tax on savings income?

 

2) offshore looks a bit more complicated i think i can still self cert tax exempt as Thailand not in EU but to be tax free do i need to pay interest into an offshore current account and draw from there or can i pay into my UK Nationwide account. Again i will be drawing the money via ATM in LOS.

 

3) If i go offshore do i have to oppen an account with my Thai address or can i use my UK address and still be non resident in UK. I think i would struggle to provide proof of address in LOS as i am renting in serviced appartments so no bills ect to provide proof of recidence.

 

Is there is anyone from UK with experience of this with any advice????

 

[teddy]

I have an account with Abbey in UK and I get my interest without any tax deductions having filled in a simple form many many years ago and I have never been taxed on the interest.

 

If you do open an offshore account you need to do it now whilst you still have an address and a history, if you try to do it with no fixed address you will have untold problems.

 

Once you have sold up you can simply change the address to your parents house. I have three offshore accounts but I would recommend HSBC as being the best, but you can get higher interest at Kaupthing.

 

Good luck :thumbup:

[wonderlust]

According to HMRC form R85 is an "application by savers who usually live in the UK to receive interest without tax taken off". It's for low income UK residents.

 

I believe that to have a UK account you should be a UK resident. I don't think you can legally have a UK account and not pay tax on it. The only way to get savings tax free for non-residents is going the offshore route.

 

You can keep your Nationwide account open and transfer money from your offshore account as and when you need to. As long as you don't tell Nationwide you're not resident it won't be a problem.

[wonderlust]

If you do open an offshore account you need to do it now whilst you still have an address and a history, if you try to do it with no fixed address you will have untold problems.

 

http://www.alil.co.im

 

Alliance & Leicester eSaver Offshore seems pretty simple to open.

[teddy]

If you do open an offshore account you need to do it now whilst you still have an address and a history' date=' if you try to do it with no fixed address you will have untold problems.

[/quote']

 

http://www.alil.co.im

 

Alliance & Leicester eSaver Offshore seems pretty simple to open.

 

I wouldn't open an account with Alliance & Leicester.

 

Of all the UK banks hit by the credit crisis/mortgage defaults it appears to me that they are the most vulnerable. Their share price has dropped 65% from its high.

[..]

I'm not from the UK, but I've used Julius Bär in Singapore for years.

 

Cheers,

SD

[wonderlust]

If you do open an offshore account you need to do it now whilst you still have an address and a history' date=' if you try to do it with no fixed address you will have untold problems.

[/quote']

 

http://www.alil.co.im

 

Alliance & Leicester eSaver Offshore seems pretty simple to open.

 

I wouldn't open an account with Alliance & Leicester.

 

Of all the UK banks hit by the credit crisis/mortgage defaults it appears to me that they are the most vulnerable. Their share price has dropped 65% from its high.

 

Deposits in UK banks are currently 100% guaranteed by the government. Even Northern Rock savers are completely safe. There's no chance of Alliance & Leicester going bust. In any case, Alliance & Leicester International is a subsidiary incorporated in the Isle of Man and doesn't seem to have any credit risk at all. Deposits are guaranteed by the Isle of Man Deposit Guarantee Scheme. I can understand why little old ladies might fret about these things and queue up outside Northern Rock but there's really nothing to worry about.

[kevkev1888]

Thanks for your replies guys, still a little confused.

 

According to HMRC form R85 is an "application by savers who usually live in the UK to receive interest without tax taken off". It's for low income UK residents.

 

I have zero income appart from the interest?

 

 

You can keep your Nationwide account open and transfer money from your offshore account as and when you need to. As long as you don't tell Nationwide you're not resident it won't be a problem.

 

This is where i'm confused if i pay interest back to UK account is it not then liable for tax? same as if i saved it onshore and had interest paid to same account?

Do i not need to pay it into an offshore current account, therefore cash never goes back to UK?

 

Buy the way the accounts i am looking at are

Birmingham midshires 6.67%

Or bank of scotland international 6.56%

 

Both owned by HBOS who also own Halifax both fixed for 1 year paid monthly.

Onshore is actualy a slightly better rate.

 

Its just the tax issue i'm not sure about?

 

 

[teddy]

Only the first £32,000 is guaranteed, anything more than that and you can whistle for it.

[teddy]

Thanks for your replies guys, still a little confused.

 

According to HMRC form R85 is an "application by savers who usually live in the UK to receive interest without tax taken off". It's for low income UK residents.

 

I have zero income appart from the interest?

 

 

You can keep your Nationwide account open and transfer money from your offshore account as and when you need to. As long as you don't tell Nationwide you're not resident it won't be a problem.

 

This is where i'm confused if i pay interest back to UK account is it not then liable for tax? same as if i saved it onshore and had interest paid to same account?

Do i not need to pay it into an offshore current account, therefore cash never goes back to UK?

 

Buy the way the accounts i am looking at are

Birmingham midshires 6.67%

Or bank of scotland international 6.56%

 

Both owned by HBOS who also own Halifax both fixed for 1 year paid monthly.

Onshore is actualy a slightly better rate.

 

Its just the tax issue i'm not sure about?

 

 

You should speak to the bank in question. As I said earlier I have an amount of money in the Abbey in UK even though I have been non-resident for almost 14 years.

 

They pay me interest without tax deduction because I filled in a form to declare that I was not liable for tax.

 

With regards to your statement "I have zero income appart from the interest?", interest from a bank account is regarded as income.