Are offshore savings accounts worth it for expats?

What is an offshore savings account?

An offshore savings account is one that’s based outside of the UK. They allow you to save money in other currencies – such as euros or dollars – making it easier to manage your finances across different countries and even different continents.

They typically require a much larger deposit than UK-based accounts – often at least a few thousand pounds – but can pay comparable interest rates to their UK counterparts. Many UK-based banking institutions have an offshore arm, too, allowing you to continue saving with a familiar name. And, as with standard UK-based savings accounts, you’ll be able to choose from a variety of account types (including no notice deals and fixed bonds), offering plenty of options to suit a range of needs.

Why have an offshore savings account?

Offshore savings accounts can be ideal for those who live abroad, but who still want (or need) a financial connection back home. They can also be a great option for anyone with property or business connections in other countries, or who need to manage their finances internationally for any other reason.

Expats could find them particularly beneficial. You’ll likely still want to open a current account in your adopted country to fund your day-to-day life, but having savings with a UK-based institution can help hugely with your money management.

For starters, because these accounts can be held in different currencies they can help make transfers quick and simple, and they could well be more secure than having an account in the economy you are planning to reside (these accounts aren’t part of the Financial Services Compensation Scheme (FSCS), but they’ll have equivalent protections). You'll often get interest paid gross as well, and while you may still need to pay tax, it could end up being more cost-effective than if you were to bank elsewhere.

How to open an offshore savings account

Once you’ve found an account that suits your needs, you can head straight to the provider to open it. Most – if not all – will allow you to open the account online or via mobile app, which will be essential if you’re based abroad!

As with onshore savings accounts, you'll need to provide proof of identity and address, such as your passport, driving licence, and/or utility bill or bank statement. Some accounts, particularly private banks with high deposit requirements, will need proof of income and financial position too, but you should check this with the provider. You may need to meet other eligibility requirements as well, such as residency criteria, or you may need to be an existing customer of the bank.

Once approved you can make your initial deposit, which will vary depending on the account, and from there you can manage it according to your needs. Typically you’ll be able to manage it online, but make sure to check the account management options before you commit.

Alternative savings options for expats

Offshore savings account not for you? You might want to consider a multi-currency account instead. These are similar to offshore accounts in that they allow you to save in currencies other than sterling, but they’re offered by UK-based banks, which means they can benefit from FSCS protection.

Alternatively, provided you’ve still got a UK bank or building society account, you may still be able to save with NS&I (but you’ll need to check with them as not all accounts can be held in other countries).

You can also continue saving into your pension, though you may not receive tax relief. This would also be a more long-term approach to saving, and other options will likely be more suitable for your short-term needs.

Can an expat have a UK savings account?

If you’ve already opened a savings account while living in the UK, you’ll normally be able to keep it while you’re living and working abroad.

However, most providers won’t let you open a new account once you’ve already moved, as you’ll typically need a UK address in order to be eligible.

Can expats open an ISA?

Similarly, ISAs are only available to UK residents, which means you won't be able to open or save into a UK-based ISA while you're abroad.

However, in some cases (depending on your bank) you'll be able to keep your current ISA open in order to benefit from compound interest, then when you're back in the UK, you can continue adding to it – or transfer it to a higher-paying cash ISA deal instead.