Are offshore bank accounts legal?

Yes, provided you use and manage it appropriately, and declare any interest earned to HMRC.

Are offshore bank accounts safe?

Yes, though protection is typically less than that offered in the UK. This is because money held in an offshore account won’t be protected by the Financial Services Compensation Scheme (FSCS), though it should still be covered by a scheme from the jurisdiction in which it is based. For example, accounts in the Channel Islands and the Isle of Man are covered for up to £50,000, with accounts held in other countries subject to their own rules. You can find out where an offshore bank is registered, and its relevant compensation scheme, in our depositor protection scheme guide .

How do I choose an offshore bank?

As is the case for all financial products, the key to finding the best offshore bank accounts for UK citizens is to compare the options thoroughly. Make sure to consider everything from the fees charged to the account management options, as well as the currencies offered. Our chart above is the best place to begin your comparison.

Best Offshore Current Accounts

What is an offshore bank account?

An offshore bank account operates in much the same way as one on UK soil. It offers a place for income or earnings to be paid into and usually has the same features as an onshore account, such as an overdraft and debit card, and most can be easily managed online or via mobile app. The main difference is that funds can be held in a different currency, typically euros or dollars, but others are available as well.

Note that these accounts are offered by many of the largest UK banks as well as more specialist providers that operate in the Channel Islands, Gibraltar or the Isle of Man. Our chart above highlights the best offshore bank accounts for UK citizens in all of these locations.

Advantages of an offshore bank account

The key advantage of this kind of account is the ability to deal with a currency that is different from UK sterling. The account holder can easily make and receive payments in other currencies without being subject to volatile exchange rates and hefty conversion fees, which can quickly eat into earnings. Expats in particular can benefit from this kind of arrangement, but so too can anyone who frequently manages their finances internationally, such as those who own property overseas.

Many offshore banking providers have offshore savings accounts available as well, allowing you to easily move your non-sterling funds into a dedicated account to earn a competitive return. Indeed, the best offshore savings accounts can offer comparable interest rates to those in the UK. Find out more about whether these accounts are worth it for expats.

Disadvantages of offshore accounts

However, there can be disadvantages to banking offshore as well. For example, you should be aware that some accounts:

charge additional fees, such as monthly account fees, transfer fees or charges for withdrawing money
may require a larger deposit than an onshore account
require that you earn a minimum amount
won’t have FSCS protection (see the FAQ below)

Tax implications of offshore savings

It’s important to note that it is not possible to avoid paying tax by banking offshore. Instead, you’re subject to the same tax implications as if your funds were held in the UK. This means that, as with standard savings and current accounts, any interest earned above the Personal Savings Allowance (which is £1,000 for basic-rate taxpayers and £500 for higher-rate) will need to be declared to HMRC on a self-assessment tax form, and any relevant tax paid. If you don’t, HMRC are likely to come calling with a considerable fine.