Offshore account? Or UK account? Need advice!

carmen_blue

We're selling our home and we'll be getting a lump sum (about £200k). Once we sell, we're going traveling and then we're moving to the States. We won't be residents anywhere for a few months and ideally we'd like to put the money in an offshore account, so we wouldn't be taxed on it and we wouldn't have to declare it as income. We won't actually need the money for at least six months, maybe longer. But I understand that our money wouldn't be protected in offshore accounts (but up to £50k per institution is protected in the UK). Would we be better off just to keep it in the UK? How would this affect our non-taxpayer status? Any other suggestions?

Reaper

I suggest you check whether the IR will treat you still being resident. I wonder if they will just count your travelling as a holiday. If they do and you remain a UK citizen then you are still liable for tax even in an offshore account and they have been cracking down on non-payers recently. If you declare yourselves resident in the USA then I imagine there are similar rules over there.

Most offshore locations have now introduced some sort of compensation schemes though in the case of widescale claims they may well struggle to fund them.

If it is ok to do and you are prepared to take the risk then you still have to decide whether it is worth it. I haven't looked in a long time but last time I did the interest rates looked pretty poor.

carmen_blue

I've talked to the IR and we can fill in a form (can't remember which) that tells them we won't be a resident anymore. We're moving to the States and as long as we have that US address and can prove that we definitely are leaving the country, then that's all they need. Yes, when we become US residents we will have to declare our offshore interest. I'm mainly thinking about the months we won't be residents anywhere - would it be worth getting offshore accounts? We can't risk losing that money, so it may be better just to keep the money here.

Cook_County

I am afraid that HMRCs answer is nonsense. It does not agree to case law.

When you get to the US are you going to make a section 7701(b)(4) election (plus possibly a 6013(g) election)? ... If so you need to figure US tax into your maths.

You certainly will have FBAR and FATCA reporting to contend with. Take specialist dual US/UK tax advice given the amounts involved and how big the penalties can be if you slip up!

withnell

carmen_blue wrote: »

I'm mainly thinking about the months we won't be residents anywhere

Going from UK to US there won't be any period during which you aren't resident - you will transfer instantly from being taxed in the UK to the US

The exact date of transfer depends on the circumstances, but there are pretty clear rules based around your intention to return when leaving the country - and the dates of "transfer" are different for IT / CGT / IHT