Saving abroad.

teajug

A friend of mind want to take his saving abroad for best interest rates and pay tax in that country what would this mean if he does this will his state pension be affected as he will be still residing in the UK.

Savvy_Sue

I know that it's very difficult to open a bank account in the UK if you don't have a UK address, Presumably there must be some other arrangements for some other countries, or maybe if you're rich enough to need a Swiss bank account you're rich enough to keep a small flat there?

However, if they claim not to live in the UK in order to avoid paying tax, there could well be implications for state pension etc.

Cook_County

It is legal to hold accounts anywhere, subject of course to local law in the jurisdiction where the account is held.

You'd obviously review the after (UK) tax interest rate, investor protection and the cost of additional probate for your beneficiaries after your death.

Voyager2002

No, no consequences for State pension...

However, interest rates are rather low all over the world. The only possible exception is Australia, but in order to benefit from Australian interest rates s/he would have to convert all savings into Australian dollars, and risk the value of the AUS dollar falling at some point in the future (it is close to historic highs at the moment).

A better plan would be something like corporate bonds in a range of companies, or even shares.

antrobus

teajug wrote: »

A friend of mind want to take his saving abroad for best interest rates and pay tax in that country .....

Even if the savings were 'abroad' and that the friend was paying tax 'in that country' on the interest received, they would still also have to pay tax in this country on the interest as well. Subject to double tax relief.

teajug

What does double tax relief mean. Also if you reside in the UK this you surely pay tax on you income that is above your personal allowance whether it from interest from savings that is aborad.

antrobus

teajug wrote: »

What does double tax relief mean. Also if you reside in the UK this you surely pay tax on you income that is above your personal allowance whether it from interest from savings that is aborad.

What it means is this; if you had £100,000 'saved abroad' in the National Bank of Uzbekistan and were receiving £5,000 of interest less witholding tax of £500, HMRC would tax you on the £5,000 interest received, calculate your liability for IT at £1,000 but give you credit for the £500 of tax already suffered at the hands of the Uzbekis, and so only ask for an additional £500. However if the Uzbekis had charged tax of £1,000 or more, HMRC wouldn't ask you for any more money, and would not in any circumstances refund any 'excess' tax you had suffered at the hands of the Uzbekis.

Which is the general principle of double tax relief. Although sometimes it can be over-ridden by a specific double-tax treaty agreed between the UK and whatever jurisdiction you're talking about.

teajug

That's what I though it meant, but wanted to be sure before I told my friend. Thanks for confirming it for me.