Best Offshore Savings Accounts

What is an offshore savings account?

An offshore account is based outside the UK, but is still open to UK residents or expats. These accounts may be suitable for Brits living abroad or those who frequently travel across different countries and currencies.

The main selling point is that you can choose which currency you’d like to save in. However, the rates tend to be lower than on ‘normal’ savings accounts, so for anyone resident in the UK who isn’t planning to leave anytime soon and doesn’t have frequent business dealings overseas, there’s not much incentive to open one of these accounts. If you’re unsure, find out if offshore savings accounts are worth it in our guide.

That said, if you’d like to have some cash savings in Euros or US dollars, offshore savings accounts could be worth considering. As with UK-based savings accounts, you can choose between easy access accounts and notice deals, or could put funds aside in a fixed rate bond.

How do I open an offshore account?

As with any savings account, different providers will offer different means of opening and operating their accounts. Some of the offshore providers are subsidiaries of the bigger UK banks and building societies, and these will likely have more account management options. You won’t need to book a trip abroad to open such an account, with many accounts able to be opened by post, telephone or online.

While the opening requirements will differ between providers, they will all ask for proof of identity and proof of address. Some will have additional requirements, such as asking you to prove that you can afford to keep the account funded, although these kinds of requirements are more common with offshore bank accounts for everyday use (which tend to come with large fees). You may also need to be an existing customer of the provider, with many of the best offshore savings accounts being linked products.

You’ll need to adhere to either a British citizenship requirement (for expat accounts) or specific residency requirements, with some accounts only open to Isle of Man, Channel Island and Gibraltar residents, and others open to UK residents.

While most of these accounts will ask for a minimum deposit of £5,000 or £10,000, there are some that can be opened with far less. Again, whether such an account would be worth opening over a standard ‘onshore’ savings account would depend on your residency status and needs. Always compare the best offshore savings accounts with onshore equivalents as well as each other to help ensure you’re making the best possible choice. 

How much tax is paid on an offshore savings account?

The money held in offshore savings accounts is not tax-free. For UK tax purposes, the same personal savings allowance is applied to any savings held in an offshore account, which means that basic rate taxpayers can earn the first £1,000 in savings interest per year without having to worry about taxation. Anything above this will need to be declared as income through self-assessment.

Remember that you may have to pay tax in the country you are residing in as well, so make sure to have everything properly organised – you don’t want to get into trouble with any government or pay double tax when you don’t need to. You may even want to get professional advice so you can be sure you’re always declaring and paying the right amount of tax. As a first step, you can find out about tax treaties on the Gov.uk website.

Is an offshore savings account safe?

Offshore providers are not covered by the UK’s Financial Services Compensation Scheme, which protects £85,000 of your savings per banking institution no matter what happens. However, this doesn’t mean your funds won’t be safe.

Instead, there will be comparable compensation schemes, such as the Isle of Man’s Depositors’ Compensation Scheme, which protects up to £50,000 per individual depositor. Find out more in our depositor protection guide, and check with the provider as to whether you will be protected by an alternative scheme depending on where the bank is located. 

What charges have to be paid on an offshore savings account?

It’s important to note that there may be charges to pay that you won’t normally come across with UK-based savings accounts. These can include transfer and withdrawal fees, CHAPS fees, cheque clearance charges and fees for making international payments, and even fees if you stop meeting the eligibility criteria. Every account will be different, so it’s wise to check the terms and conditions of your preferred product so you know what to expect.