Offshore savings accounts

Wednesday, 25 July 2007 03:43

Offshore savings accounts are savings accounts where money or assets are placed in a country other than the one in which you live.

This can be done to take advantage of beneficial tax laws in other countries, or to secure higher interest rates than are easily available at home.

Another advantage is that money can easily be deposited in several currencies - including sterling, euros, and dollars.

However, rarely are these accounts completely tax free, and Britons are required to tell local tax authorities at home they have money overseas. But there is still an advantage as interest is allowed to build up for a full 12 months before it is taxed - rather than being taxed at source.

While Cayman Islands offshore accounts might make the headlines, more often accounts are run from places like the Channel Islands, the Isle of Man and Ireland.

There is also a risk attached as offshore savings accounts are not all covered by the UK Financial Services Compensation Scheme.

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