Saving opportunities for non-residents
EnglishMohican
Posts: 173 Forumite
I have a daughter who is currently working in Spain and is considered a Spanish resident. Her long term plans are totally unclear. She has a Spanish Bank Account for her salary to go into and day to day expenses. She also has a UK bank account and ISA from the days when she lived and worked here and a UK corresponse address (my house).
She has saved some money (2k euros) in Spain which is currently sitting in her current account earning nothing.
She has just inheriting some money in the UK (£10k).
The two pots of money could be combined but with currency risk.
Spanish saving accounts seem dreadful (<0.5%). Better UK accounts are for UK residents. I do not believe she is allowed to add money to her existing ISA, maybe she could add money to her existing UK savings account - but it is nothing special. I am sure that legal grey areas exist that we could use but we would prefer to stay totally above board.
Are there useful solutions to this problem that I am not aware of? What suggestions can the forum offer to keep her money safe and earning even a half decent interest rate.
Offers to look after it for her do not qualify as useful and offers of marriage will be rejected unless you are very rich:)
Thank you.
She has saved some money (2k euros) in Spain which is currently sitting in her current account earning nothing.
She has just inheriting some money in the UK (£10k).
The two pots of money could be combined but with currency risk.
Spanish saving accounts seem dreadful (<0.5%). Better UK accounts are for UK residents. I do not believe she is allowed to add money to her existing ISA, maybe she could add money to her existing UK savings account - but it is nothing special. I am sure that legal grey areas exist that we could use but we would prefer to stay totally above board.
Are there useful solutions to this problem that I am not aware of? What suggestions can the forum offer to keep her money safe and earning even a half decent interest rate.
Offers to look after it for her do not qualify as useful and offers of marriage will be rejected unless you are very rich:)
Thank you.
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Comments
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The 2k of euros she'll need that for her day to day expenses to be kept in euros. She'll need to find a bank that pays interest on credit balances to make the most of that. How about the Banco Santander 1-2-3 Current Account? 15k of euros can earn up to 3%.
The £10k...what does she want to do with it? Save it in pounds or save it in euros? If in pounds there's plenty of accounts she could open in the UK using your address. If she wants to transfer it to euros then she'll need to find a local bank which she can use. Again Banco Santander would be a good choice.:footie:
Regular savers earn 6% interest (HSBC, First Direct, M&S) Loans cost 2.9% per year (Nationwide) = FREE money. 0 -
If in pounds there's plenty of accounts she could open in the UK using your address.
Using someone else's address could be an option but if you aren't on the ER at that address and if the address on your credit files doesn't match, it might not be so easy.
What do you suggest she should do if she gets asked to pop into Branch with proof of ID? What if this happened after she had deposited some money and her account got blocked?
OP, sorry, I don't have any ready answer. But might be worth speaking with Santander UK, because of the link with Banco Santander. Although their T&Cs don't look favourable, and I am not aware that any of the interest-paying current accounts can be applied for by non-residents.0 -
Thank you both for your thoughts. I was not aware that the Spanish Bank did an equivalent to our 123 account so that could be a winner. I will get her to check out the details.
If the Spanish 123 account is good then that might also be a home for the 10k. That involves hoping the euro exchange rate improves once she has converted the currency. Not so good if it gets worse so a gamble.
I think AB has covered my concerns about setting up UK accounts from my address. Its OK for the existing accounts but very doubtful for new ones.0 -
The £10k...what does she want to do with it? Save it in pounds or save it in euros? If in pounds there's plenty of accounts she could open in the UK using your address. If she wants to transfer it to euros then she'll need to find a local bank which she can use. Again Banco Santander would be a good choice.
Sadly, that's not true. All the banks I have looked at for my son's UK savings require you to declare that you are a UK resident.Archi_Bald wrote: »Using someone else's address could be an option but if you aren't on the ER at that address and if the address on your credit files doesn't match, it might not be so easy.
What do you suggest she should do if she gets asked to pop into Branch with proof of ID? What if this happened after she had deposited some money and her account got blocked?
And that's assuming she's prepared to make a false statement on her application :cool:.Archi_Bald wrote: »
OP, sorry, I don't have any ready answer. But might be worth speaking with Santander UK, because of the link with Banco Santander. Although their T&Cs don't look favourable, and I am not aware that any of the interest-paying current accounts can be applied for by non-residents.
Agreed. That's why my son has substantially more than £10k languishing in a UK account paying 0.5%:(0 -
Could she lend you the £10,000, interest to be rolled up and paid on repayment? You would both sign a loan agreement.
You might then deposit the money in say Lloyds, Nationwide Flexdirect, TSB, Tesco, current accounts in your name, not touching the capital and moving the interest to the Tesco.
You repay your daughter on demand, when she returns to the UK etc?0 -
She could - but I would worry that it might become part of my estate - which it would be better if it did not. I do note that you talked about a signed loan agreement but am not clear how formal (costly) that would have to be to be legally valid.
It would also add to my tax - which might be no worse than the tax my daughter would pay in Spain if it was in her name - but does add confusion.
I did have a Nationwide FlexDirect for a year for my own savings but it was a lot of trouble for not much gain given the maximum amount you can earn interest on. It discourages me from using the low limit accounts and I already have my own 123 account - and would run out of direct debits if I opened another for her money. Yes, I know there are ways round that and I should be leaping to help dear daughter but to some extent, I also want her to stand on her own two feet - not mine:)0 -
EnglishMohican wrote: »She could - but I would worry that it might become part of my estate - which it would be better if it did not. I do note that you talked about a signed loan agreement but am not clear how formal (costly) that would have to be to be legally valid.
your debts are deducted from the value of your estate (for the purposes of inheritance tax).
signed letters between you and your daughter, agreeing the terms of the loan, would be sufficient to create a legal agreement. you don't necessarily need a lawyer for that.It would also add to my tax - which might be no worse than the tax my daughter would pay in Spain if it was in her name - but does add confusion.
it would presumably suffer from double taxation on interest. because not only would you pay tax on the interest, but then your daughter would also be liable for tax on any interest you pass on to her - at least, if she lived in the UK, she'd be liable to UK tax on it, so assuming that spanish tax works in a similar way (which i don't know), then she'd probably be liable to spanish tax on it while living there.0 -
I had a quick look at the Spanish Santander 123 site but as it is in Spanish (reasonable I suppose) I did not make a lot of sense of it. I have referred it to dear daughter to investigate.
If it is as good as the UK 123 account then it may be the way forward for both pots of money. It gives her enough to hit the maximum return and it saves a lot of hassle with me saving her money for her in the UK. With luck she will also get a currency gain - ok thats a gamble.
Will report back her findings on Spanish 123 when I have them.
Thank you everyone for the help so far0 -
From next financial year, your tax position on interest from savings might ease (depending on your position).
http://www.taxation.co.uk/taxation/Articles/2015/04/14/332906/all-change
"April 2016 will bring two further big changes for savings income:
Banks and building societies will begin to pay all interest gross. The 20% income tax deduction will disappear and with it form R85. After that, HMRC will include any taxable savings income in the PAYE code and collect the tax through the PAYE system or self assessment.
A new personal savings allowance will be introduced. Basic rate taxpayers will receive up to £1,000 of savings income tax free, while higher rate taxpayers can receive up to £500 tax free. Additional rate taxpayers will have no tax-free savings allowance."
A signed agreement between you and your daughter would be sufficient to document the loan.
With regard to IHT, the loan would decrease rather than increase your estate.
If the interest were tax free to you as above then could still be worth considering.
The loan from your daughter could also be interest free.0
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