Deferred interest savings

NozzaC

I noticed various firms offer deferred interest savings accounts in overseas locations like the Isle of Man etc. Some of them appear to only pay the interest when you close the account.

So in UK tax terms, is it as simple as it sounds? Can one use them to manage the tax point at will? Does it affect benefits or tax credits that take interest as income into account?

In theory, could you have a million pounds in such an account, meet all the other requirements to get say working tax credits and get it until such point as you took the interest?

NozzaC

Does anybody know about this at all?

dunstonh

Offshore investment bonds seems to be what you are talking about as they are classed as life assurance bonds so do not get included in the means test for benefits. Interest (if you choose deposit based) accrues as normal but only becomes chargeable in the tax year you create a chargeable gain. So, you do get the benefit of gross roll up and deferment. However, they only work well long term (create a chargeable gain early on and it can cost far ore). They also require larger figures to get the best terms.

NozzaC

Thanks for the info.

The things I've been looking at don't mention bonds - http://www.moneyfacts.co.uk/offshore/bestbuys/offshore-deferredinterestaccounts.aspx

are these the same things you are talking about?