You are here: Home - Saving & Banking - News - Understanding -

Is it time to consider offshore savings?

0
Written by: Paloma Kubiak
25/08/2017
Skipton International has launched a market-leading offshore bond. But what are these savings products and should you consider them as part of your savings strategy?

Skipton International has launched an offshore bond – a fixed rate bond which matures on 30 September 2020.

It’s paying a market-leading 1.50% yearly to those who have a minimum £10,000 to deposit, way above the next best offering: Leeds Building Society pays 0.85% on its two-year fixed rate.

The Skipton bond can be opened in branch or by post and can then also be managed by phone. Once opened, no further deposits can be made and there’s no access to the funds before the product matures.

It’s important to note that the first £50,000 per person or per bank/building society is protected by The Guernsey Depositors’ Compensation Scheme rather than the UK’s Financial Services Compensation Scheme (FSCS) which protects savings up to £85,000.

Given its market-leading status and the suppressed interest rates offered on other cash savings products, should you consider offshore bonds?

Offshore savings: an introduction

Offshore savings accounts allow UK savers to keep their money outside of the UK and they’re typically operated by subsidiaries of major banks, such as Skipton International and Skipton Building Society.

The accounts are usually run from the Channel Island, Isle of Man or Gibraltar and they can be set up even if you live and work in the UK. As such and as above, any money held in them will not be subject to the UK FSCS protection scheme, so data site Moneyfacts says it’s vital for savers to check if their money is protected by an alternative deposit protection scheme.

You must declare the interest gained on your offshore savings and HM Revenue & Customs is likely to impose large fines to anyone suspected of hiding taxable income.

Moneyfacts suggests that when people look for an offshore account, they should consider the same factors as those when looking for a UK-based product, such as whether you want to receive the interest monthly or annually and whether you want a fixed or variable rate.

Rachel Springall, finance expert at Moneyfacts, said: “The offshore savings market has condensed considerably over the years and many may be wary of investing due to media criticism of these accounts.

“So long as savers are aware of the risks involved and that they declare their savings interest, then these deals can be an alternative savings vehicle for any portfolio.

“However, as it stands, the interest available on the top best buy deals in the UK market are paying above the deals available for offshore and with the Personal Savings Allowance (PSA) in place, certain investors can take home more interest as it is.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
Why new ‘ring-fencing’ rules mean you may get a new bank account number

New banking rules will see around a million bank account holders sent new account numbers and/or sort codes.

Close