Expat Finance

Offshore Savings Accounts for Expats

Is there any point in opening an offshore savings account? This seems to be a big question for many people leaving the UK. Post emigration many expats continue to use the British banking system, in part due to familiarity and recourse for any discrepancies or queries that may occur with their bank account. However, this decision has to offset with the substantial benefits that can be realised once you lose your tax residency status in the UK from even the simplest form of offshore savings account.

You can also save offshore for your pension – and you can do so through a more conventional offshore pension plan such as QROPS. The offshore savings and investment paradigm has dramatically changed in recent years. Its no longer seen as slightly dodgy to have offshore accounts in fact expats who don’t are seen as behind the times.

Why Are QROPS Pensions So Popular?

In essence, to be free from the rules and restrictions associated with UK pensions after five complete tax years of non-residence. Then benefits are aplenty! Such as QROPS benefits on death are generally free from tax contributing to a substantial tax saving. Some QROPS enable a much higher level of income to be drawn at a lower tax rate. UK pension schemes restrict the lump sum that can be taken to 25% of the fund; many QROPS schemes do not have this restriction. QROPS generally do not have investment restrictions and allow the use of an investment manager of your choice. The list goes on, expats make sure you don’t miss out.

How Much Inheritance Tax Do I Have To Pay?

Individuals currently have a ‘nil rate’ of inheritance tax to pay on the first £325,000 of their estate; what ever is left the state is entitled to claim a massive 40%. If the recognised partner be it the spouse or civil partnership passes on without utilising all or part of their ‘nil rate’ allowance then executors can apply for the remainder of the allowance to be passed on. Effectively this would lead to a maximum allowance of £650,000 before inheritance tax would become payable.