US $ Savings account

Sillychuckie

Hi,
I have a reasonable amount of money (possibly $20-30k or so) in the US, earning a (poor ?) rate of 4.5% FIXED. This however is GROSS as I do not pay tax on these funds (permanent uk resident).

I realise it would be stupid to bring the money to the UK both because the exchange rate is awful at the moment, but also I would then have to pay tax on the growth.

My question is, does anyone know of any US $ savings accounts that offer a better rate than 4.5% Gross. Is this a good rate for america, or not?

Also, can these be opened by myself from the UK without visiting the US?
Are there any accounts that allow this?

If not, do they allow opening accounts via a 3rd party in my name? I have family in the US and imagine this is how the account was opened in the first place. I'm sure they would be happy to help and be a 'custodian' (as is the case with the account I am currently talking about).
I don't like getting 4.5% if it can be easily beaten.

I notice Citibank do a US dollar deposit savings account which can be opened here, but they only pay 2.53%.

Am I trying to flog a dead horse, or should I simply leave the money (as I expect is the case) until both:
a) The currency conversion rates are better
b) I have something to spend it on... like paying off a mortgage (so having to pay tax on it becomes a non-issue).

Currently, I do not need the money. I am just trying to do the best with it as possible.

Thanks for any input. I imagine that sitting pretty is the only sensible thing to do but would feel better if people told me I was right.

Many thanks.
SillyC!

gt94sss2

HSBC offer 5.05% with their HSBC Direct account - which I think is the mainstream market leader

Emigrant Direct, the direct bank of Emigrant Savings Bank, New York, also offers 5.05% on cash savings

Lydian Virtual Bank's e-Money Market account pays from 4.6%

ING Direct seem to offer 4.5%

No idea how easy they are to open if you are based here in the UK/without a US Social Security number etc.. (would be interested in knowing though!, if you find out)

Regards
Sunil

cheerfulcat

Sillychuckie wrote:

Hi,
I have a reasonable amount of money (possibly $20-30k or so) in the US, earning a (poor ?) rate of 4.5% FIXED. This however is GROSS as I do not pay tax on these funds (permanent uk resident).

I realise it would be stupid to bring the money to the UK both because the exchange rate is awful at the moment, but also I would then have to pay tax on the growth.

You are still liable to UK tax on the interest, whether you bring it back to the UK or not. You should be declaring it to the taxman...

Cook_County

It sounds as if SillyC is not UK domiciled so there is no UK tax on the interest unless brought to the UK.

Citibank's esavings account is offering 5% on $1 upwards:
https://web.da-us.citibank.com/cgi-bin/citifi/portal/ps/detail.do?M_M=S&BS_Id=eSavings

Sillychuckie

cheerfulcat wrote:

You are still liable to UK tax on the interest, whether you bring it back to the UK or not. You should be declaring it to the taxman...

I was unaware of that, but thanks for letting me know. I shall look into it.

The account was set up by a grandfather when I was a small child. They lived in america, however I am (and always have been) a permanent UK resident.
They opened it using a family member as a custodian, and I have never touched it. It is a bond whereby I can not withdraw (only close it, and only do so by going Via the named custodian. They too however can not take money out without my permission).

I earn enough to pay tax here in the UK, but are you sure I need to pay tax on this off shore account also? That doesn't sound right. Does this need to be done each year, or can it just be worked out when I finally bring it to the UK. What If I dont bring it to the UK? I have never heard of having to pay tax on off shore funds... this I thought was the whole attraction of using them.
Please explain further.

Obviously, I would (have to pay tax) if I opened a UK based dollar account and moved the funds there (for a higher rate), but this seems like a poor choice if I would then get hit with tax.

Thanks for the suggestions people, I will loook into them.

EDIT: Sunil, can't open the accounts you mentioned due to non US resident. No SS number either. Thanks anyway.

cheerfulcat

Hi, Sillychuckie,

I earn enough to pay tax here in the UK, but are you sure I need to pay tax on this off shore account also? That doesn't sound right. Does this need to be done each year, or can it just be worked out when I finally bring it to the UK. What If I dont bring it to the UK? I have never heard of having to pay tax on off shore funds... this I thought was the whole attraction of using them.
Please explain further.

People who are UK resident and domiciled have to pay tax on worldwide income, whether it is brought back to the UK or not. If tax is paid on it in the country where it arises you have a credit against the UK liability but the income still needs to be declared.

There is normally no tax advantage in offshore funds to the ordinarily resident and domiciled UK citizen ( except in the case of " rollup " accounts where the interest is calculated but not credited until the end of a term ). I have no idea whether the " bond " structure of your deposit, with a " custodian ", makes it some sort of trust, in which case there may be tax loopholes but I think that you need to get some more specialised tax advice.

bobdauilda

cheerfulcat wrote:

Hi, Sillychuckie,

People who are UK resident and domiciled have to pay tax on worldwide income, whether it is brought back to the UK or not. If tax is paid on it in the country where it arises you have a credit against the UK liability but the income still needs to be declared.

There is normally no tax advantage in offshore funds to the ordinarily resident and domiciled UK citizen ( except in the case of " rollup " accounts where the interest is calculated but not credited until the end of a term ). I have no idea whether the " bond " structure of your deposit, with a " custodian ", makes it some sort of trust, in which case there may be tax loopholes but I think that you need to get some more specialised tax advice.

Does that apply to to expats living in Australia too?

Cook_County

Australia taxes Australian residents on worldwide income - you'll need to know if you are resident there to know what the tax implications are.

Cook_County

Just because Sillychuckie has alwats been a permanent UK resident does not automatically make him/her domiciled here.

Grandfather lived in the US, where was father born?

cheerfulcat

Hi, bobdauilda,

An expat is by definition not ordinarily resident in the UK so no, at least not as far as UK taxes are concerned.

Cook_County

Just to say that an offshore rollup fund is probably caught by the Australian Foreign Investment Fund (FIF) regime so is unlikely to be desirable for an Australian resident.