What to do with savings whilst abroad?

bmouthboyo

Just wondered if anyone might be able to through some advice this way regarding my situation.

I am currently working abroad in Asia, probably for 4 years in total. My wife and I have a small amount of savings (10k) and putting away at least another 1k a month. We don't have any property, mortgage, debts etc other than student loan which the repayments are very low, especially out here.

We tried to setup a Santander Savings account @ 3% before we left but I think due to a miss match in addresses or something it was not accepted, and we had left by then so did not bother to see what the exact reason was and rectify it. We have never had any unpaid debts, bills etc so can't be credit score.

We hope to one day use it towards a house, however we are waiting out for property prices to fall as it is simply unsustainable the rate they are increasing compared to UK salaries. That and the fact being abroad would make buying and subletting a nightmare from so far away.

Am I correct in thinking we cannot have an ISA when living abroad? If so can anyone recommend any other options to best maximise out savings?

Thanks in advance guys.:beer:

lisyloo

as it is simply unsustainable the rate they are increasing compared to UK salaries

I don't agree with you there. The population is increasing.
Why can't you have more salaries per house?
In fact that's inevitable isn't it if the population keeps rising.

You need to look for the highest interest rate you can find. Put it in the name of the lowest rate tax payer and if your wife doesn't pay tax then fill out form R85.
Rates will be very low I'm afraid.

eskbanker

bmouthboyo wrote: »

Am I correct in thinking we cannot have an ISA when living abroad?

If you don't already have an ISA then no, you can't open one when abroad, see http://www.hmrc.gov.uk/isa/faqs.htm#14

JasX

To clarify you may *have* an ISA whilst abroad but you may not open one or add to it after leaving. Hindsight is great but the best move would have been open an ISA before leaving, ideally one on a deal you'd not need to touch until after you were due back (but ofc could get at in an emergency eg a decent 4yr or 5ry fixed rate deal, halifax used to do one but I've not re checked since locking in at 4.5% a few years back). And then you just leave it there untouched until you got back

bmouthboyo

Would it be possible to apply for an ISA from abroad? At present I am under the statutory 180 days to be considered "Non Domicile" so could apply possibly? When we left we did not have enough to put into savings so I don't think it would have made much difference.

Does anyone know much about offshore accounts? Benifits, drawbacks etc?

EdGasket

You cannot apply for an ISA or add to one if you are not UK resident.
You could certainly apply for an offshore account but make sure you know the protection arrangements as you will not get the £85K protection you do in the UK if the bank fails. The channel islands are well respected but the problem is that for a relatively small investment and low interest rates, the fees might exceed your return !

bmouthboyo

Out of interest, what government department would deal with people who open an ISA from abroad? HMRC? And how does said department find out? I can't imagine naughty ISA savers are top of the list with all the benefit and disability scroungers about. I imagine most of the process is online?

lisyloo

And how does said department find out?

You have to give an NI number when you open an ISA, so I guess they tie things up on-line that way/

Like you I don't think it's a top priority but most of us would want to avoid tax evasion like the plague and even make efforts (like checking we don't go over the limit) to avoid triggering an HMRC investigation through an innocent mistake.

It could be very costly and inconvenient to have an investigation just through a silly mistake.

Most of us regard the lifetime benefits as very valuable and would want to stay on the right side of the law, but I agree, it's probably not where they (HMRC) target a huge amount of resources.

HMRC do send a "slapped wrist" letter telling you that you've been naughty if you go over your limit, so clearly there is some checking going on.

Thrugelmir

As you are not UK taxpayers currently. Then sheltering savings into an ISA makes little difference.

What's on offer where you are?

xylophone

I wonder is there anything here which might suit?http://www.money.co.uk/savings-accounts/offshore-instant-access-savings.htm

brasso

If you add to an ISA, or open an ISA while abroad, you run the risk of HMRC insisting that you are liable to pay UK tax. When you then protest that you are resident overseas, they will produce all sorts of 'evidence' to show that you retain your UK resident status. A prominent piece of such evidence is you paying into an ISA.

I'm not making this up. I've seen it happen.

Don't risk it. The potential gains are nowhere near the potential penalties.

If you have savings that you want to invest, then why not open a savings account in the country where you're domiciled? Personally I wouldn't bother with 2 or 3% cash savings which will barely keep abreast of inflation. You are gaining nothing in real terms. I'd open a share / investment account and (if you're very cautious) buy some low cost diversified trackers. If you're a little more adventurous you could learn a bit about investment and earn well over 3% through dividends while also seeing your capital grow. (No guarantee with the latter of course, but unless you are thinking very short term, you are likely to be able to weather a bit of volatility and end up doing much better than just keeping cash in the bank.)