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Where can I save from abroad!

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Hi there,

I wonder if anyone could help me? I am being posted abroad (Germany with work) for 3.5 years and will be earning just over £4k a month (which will be free from German and UK income tax due to the nature of my work) so transfering the money back to the UK wont be a problem in regards to charges.

After a few calculations, I will be sending a minimum of £2k a month back to the UK for saving purposes. (£24k a year) I wont be needing access to the money for at least 3 years so my question is, where the hell do I put this money to gain the maximum benifits? It is my intention to apply for a mortgage when i return so this may have some bearing?

Thanks in advance
:confused:

Matt
«1

Comments

  • chookie1
    chookie1 Posts: 117 Forumite
    Part of the Furniture Combo Breaker
    Hi there,

    I wonder if anyone could help me? I am being posted abroad (Germany with work) for 3.5 years and will be earning just over £4k a month (which will be free from German and UK income tax due to the nature of my work) so transfering the money back to the UK wont be a problem in regards to charges.

    After a few calculations, I will be sending a minimum of £2k a month back to the UK for saving purposes. (£24k a year) I wont be needing access to the money for at least 3 years so my question is, where the hell do I put this money to gain the maximum benifits? It is my intention to apply for a mortgage when i return so this may have some bearing?

    Thanks in advance
    :confused:

    Matt

    I would strongly suggest that you don't send it back to the UK. If you're non-resident in the UK for tax purposes, you'll only pay UK tax on interest on money if it's actually in the UK - if it sits in an offshore bank account it won't be subject to UK tax. Having said that, if you become subject to German tax because you're living there the interest may be taxable by the Germans - German tax law not my speciality :-) so you should probably check it out as some countries only tax on domestic income, not worldwide.

    If you do stick it in an offshore account eg HSBC or Abbey International then do remember it probably won't be covered by the FSCS.

    Other side of the coin is that if you haven't got other UK income, it's likely that your interest income would be lower than the UK personal allowance so you wouldn't pay tax anyway... so may not be worthwhile.
  • KieranB
    KieranB Posts: 70 Forumite
    chookie1 wrote: »
    I would strongly suggest that you don't send it back to the UK. If you're non-resident in the UK for tax purposes, you'll only pay UK tax on interest on money if it's actually in the UK - if it sits in an offshore bank account it won't be subject to UK tax. Having said that, if you become subject to German tax because you're living there the interest may be taxable by the Germans - German tax law not my speciality :-) so you should probably check it out as some countries only tax on domestic income, not worldwide.

    If you do stick it in an offshore account eg HSBC or Abbey International then do remember it probably won't be covered by the FSCS.

    Other side of the coin is that if you haven't got other UK income, it's likely that your interest income would be lower than the UK personal allowance so you wouldn't pay tax anyway... so may not be worthwhile.

    EDIT: My mistake. Please ignore my post below

    But by keeping it in an offshore account, if Matt was to move back to the UK and then try and bring the cash back into the UK, it would be subject to income tax (and if Matt is earning £4k per month then he will be a higher rate tax payer therefore incurring a hefty 40% charge.
  • tradetime
    tradetime Posts: 3,200 Forumite
    You can fill out an R85 Form to have interest paid without tax being deducted if you are not eligible to pay UK tax. You need to look at the necessary requirements and make sure whatever account you decide on will allow this, most banks and building societies do, the only concern then is whether they will allow you to continue to use an onshore account whilst you are non resident, rules keep changing.
    Hope for the best.....Plan for the worst!

    "Never in the history of the world has there been a situation so bad that the government can't make it worse." Unknown
  • chookie1
    chookie1 Posts: 117 Forumite
    Part of the Furniture Combo Breaker
    KieranB wrote: »
    But by keeping it in an offshore account, if Matt was to move back to the UK and then try and bring the cash back into the UK, it would be subject to income tax (and if Matt is earning £4k per month then he will be a higher rate tax payer therefore incurring a hefty 40% charge.

    No - afaik that's not the case. If the money is earned in another country whilst you're non-resident in the UK then it's never taxable by the UK (although may be taxable by the country that you live in). When he moves back to the UK, and becomes resident again for tax purposes the *interest* on this capital is taxable - whether he moves it to a UK bank or leaves it in First Bank of Lichtenstein or wherever.
  • chookie1
    chookie1 Posts: 117 Forumite
    Part of the Furniture Combo Breaker
    tradetime wrote: »
    You can fill out an R85 Form to have interest paid without tax being deducted if you are not eligible to pay UK tax. You need to look at the necessary requirements and make sure whatever account you decide on will allow this, most banks and building societies do, the only concern then is whether they will allow you to continue to use an onshore account whilst you are non resident, rules keep changing.

    In my experience of being non-resident UK banks are *very* unwilling to accept your business if you don't have a UK address (and equally for credit cards etc). HSBC seem to be an honourable exception. You may end up having to open an offshore account - unless you can find a German bank that will let you hold GBP.
  • KieranB
    KieranB Posts: 70 Forumite
    chookie1 wrote: »
    No - afaik that's not the case. If the money is earned in another country whilst you're non-resident in the UK then it's never taxable by the UK (although may be taxable by the country that you live in). When he moves back to the UK, and becomes resident again for tax purposes the *interest* on this capital is taxable - whether he moves it to a UK bank or leaves it in First Bank of Lichtenstein or wherever.

    Apologies.:beer:
  • chookie1
    chookie1 Posts: 117 Forumite
    Part of the Furniture Combo Breaker
    Probably the best place to get the final say on this is HMRC's Centre for Non Residents. http://www.hmrc.gov.uk/cnr/
  • chookie1
    chookie1 Posts: 117 Forumite
    Part of the Furniture Combo Breaker
    KieranB wrote: »
    Apologies.:beer:

    no problem
  • ag120
    ag120 Posts: 46 Forumite
    will any of your income be paid to you in Euros? If so, I suggest that you stash some with Bank of Scotland Germany (I'm sure you can guess their web address) @4.5% (regulated by the FSCS too). In Germany every saver can earn EUR 801 in bank interest and this won't be taxed so it would seem silly not to take advantage of that allowance. If none of your income is paid to you in Euros you need to think carefully about exchange rate hedging - living in Germany you'll need to spend in Euros and exchange rates could be very different by the time you get to the end of your contract!
  • tradetime
    tradetime Posts: 3,200 Forumite
    chookie1 wrote: »
    In my experience of being non-resident UK banks are *very* unwilling to accept your business if you don't have a UK address (and equally for credit cards etc). HSBC seem to be an honourable exception. You may end up having to open an offshore account - unless you can find a German bank that will let you hold GBP.
    Possibly, which was why I said s/he needed to check with banks s/he may be interested in, I personally did not have any problem converting my accounts to interest free in a similar situation, the accounts were opened and funded while I was resident, I then went non resident for a period of time with the view (as far as they were concerned) of returning after a few years, but these things are always changing, and this was pre Sept 11th, after which banks became a lot more fussy.
    As for plastic and a current account I simply opened an offshore current account.
    Hope for the best.....Plan for the worst!

    "Never in the history of the world has there been a situation so bad that the government can't make it worse." Unknown
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