Frequently asked questions about offshore accounts

Are there any guarantees on deposits made into offshore accounts?

All banks and building societies in the UK are regulated by the Financial Services Authority (FSA), it is this authority which created and is responsible for the Financial Services Compensation Scheme. However, because the funds are being invested offshore this scheme does not apply in most instances.

Some offshore banks will have insurance protection in place, but this is something which individuals should seek further advice on. Nobody wants to see a repeat of the 2008 collapse of ‘Landsbanki’ in Guernsey and ‘Kaupthing Singer & Friedlander ‘ in the Isle of Man, where many people feared for the loss of their funds.

Are all offshore accounts tax free? There are many accounts which are held offshore which are exempt from income tax. These are known as ‘Tax Havens’. By shopping around on the Internet or by using an Independent Financial Adviser to do the leg work for you, it is possible to find countries which will hold your account tax free. Popular places for UK investors to hold their money are:

• The Channel Islands
• Luxembourg
• Isle of Man
• Bermuda

Is there an alternative to offshore savings accounts which offer good rates of interest?

The finance sector of the UK offers a vast array of different saving products. The right type of account really depends on a variety of factors such as:

• The amount of money to be deposited
• The access required to funds
• The amount of risk associated to the account

If it is a tax free investment scheme that is required, an ISA would fulfill this criteria. Alternatively there are lots of other options available from National Savings & Investments, which are all government backed products, as well as other products available from the High street banks and building societies. For further information take a look at our guide for Savings Accounts.

What are the benefits to investing in an offshore bond as opposed to an onshore ISA?

Onshore ISA’s are great savings products as they allow the fund to grow free of tax. The downside to them is they have a capped investment of £5100 per tax year. If this allowance has been used and you are fortunate enough to still have funds left over which you want to invest, an offshore savings account or offshore bond account can prove effective.

Download the Offshore Savings PDF Guide here - see our other free PDF guides here

Guide Contents

What are offshore accounts?
The different types of offshore accounts
Day to day banking with offshore accounts
Saving with offshore accounts
Shopping around for an offshore account
Frequently asked questions about offshore accounts

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