Advice on Offshore Bank Accounts please

robledouk

Hi there,hope you can give me a bit of advice regarding offshore bank accounts.

My mother was recently widowed leaving her with an offshore bank account of 120k. My father worked abroad most of his life and thus everything he had was earned and taxed abroad.

Is there any benefit for my mum to keep the offshore bank account?
(She now lives in the UK but may go abroad down the line but not permanently)

Currently it earns a fair bit of interest (around £340 a month) but was wondering if she'd earn more if that money is brought back into the UK?

Would prefer instant access to all of it with no risk type investments. I know very little on this subject so would appreciate some advice

Thank you in advance

Madiba_2

After tax, in the A&L Direct Saver she will earn about £440 a month in the UK.

It is intant access, but with the penalty of losing a months interest. So it might be worth sticking £110k in the A&L and keepnig 10k in an IceSave.com account.

Thats what I would do.

To reduce the risk further, you could open several accounts and put £35k in each to make the most of the FSA guarentee.

She could also put some in a cash ISA to avoid tax if that is required.

Cook_County

If mum is domiciled in the UK she gets no tax advantages for keeping the money offshore because the interest is taxable here.

If she is not UK domiciled she pays no UK tax on the interest so should keep the mony invested offshore.

robledouk

thanks for the replies. Yes mum is UK domiciled.So she would earn more interest if she brought it back into the UK?

It's quite easy and straightfoward as it is right now (just the 1 account) but if as you say more interest would be earned bringing it back here then it would definitely be considered.

Bit unsure about Madiba's idea of investing 35k in several accounts etc.(I'm sure it's a great idea but!)....it might be a bit complicated for mum to keep track of! esp online stuff like icesave.com as she's not really very internet literate!

currently she banks with Lloyds and spoke to am advisor briefly there who said she could get around 500 a month interest from 120k, don't know the whole ins and outs of it yet (maybe Scottish Widows portfolio?)

arealhighlander

If you are domiciled in the UK, even if you have your money in an overseas account, you have to pay UK tax on it.

Therefore, you compare the interest rates (compare Gross rates for an equal comparison as thats what the overseas one is) and whoever pays the most wins. I would suggest and IFA would be best for advice.

Note if you go to the bank and ask, they will ONLY offer you advice on the savings and investments that THEY supply.

Also, you said "My father worked abroad most of his life and thus everything he had was earned and taxed abroad."

That is not true (as above), if he was domiciled in the UK, then he SHOULD have paid UK tax. Working abroad does not mean you are UK tax exempt. Hope the taxman doesnt twig! He can go back 5 years for unpaid tax.

jamesd

Instant accesss and no risk severely limits the income available, to below 2% after allowing for inflation, or to losing inflation per year in income. Why does it need to be instant access? Does it all need to be instant access? Can some be tied up in, say, an annuity? What is your mother's tax situation and other income?

cheerfulcat

arealhighlander wrote:

Also, you said "My father worked abroad most of his life and thus everything he had was earned and taxed abroad."

That is not true (as above), if he was domiciled in the UK, then he SHOULD have paid UK tax. Working abroad does not mean you are UK tax exempt.

Not quite. He would have had a UK tax liability for the foreign income, which ( in most cases ) would have been satisfied by the tax paid abroad.