[Tony&Kat]

Hi everyone,

By any chance does anyone know if it'd be worthwhile us putting our money into an offshore account? We are in the process of selling our house and should have approx £35,000 equity to move over to NZ. We just wanted to leave it in an account for a year or so before we buy over in New Zealand. Would we get taxed a lot if we just put it in a UK account? Do anyone know of any good offshore accounts we could use? Any help would be much appreciated.

Thanks a lot

Tony

[alan999]

I would say yes for two reasons, tax free interest and hopefully a better exchange rate in 12 months time, but don't quote me.
Most people seem to use Bradford and Bingley but there is also Nationwide International but there are others. Not sure about keeping a UK account open when not living in the country. I've opened accounts with both.
Alan..

[Tony&Kat]

I would say yes for two reasons, tax free interest and hopefully a better exchange rate in 12 months time, but don't quote me.
Most people seem to use Bradford and Bingley but there is also Nationwide International but there are others. Not sure about keeping a UK account open when not living in the country. I've opened accounts with both.
Alan..

Ok, thanks Alan, I'll definately look into those options, much appreciated

Tony

[Nick88]

Does anyone know what the interest rates are on foreign currency denominated savings accounts are like here? If they are comparable to NZ$ accounts you would be hard pressed to get a better return anywhere else. If you don't live here yet there would be no tax either, just a Non-residents' withholding fee of about 2%.

[Red Devil]

... I can recommend a NatWest offshore account :nice1

www.natwestinternational.com

[thezorbster]

Alliance & Leicester international had the best rate when we did it 6 months ago.

[dharder]

Does it make a big difference though if you have to pay the taxes in the UK anyway?

We are just looking into all this, and anything financial tends to be far above my head...

We've opened an international savings and current account with Barclays (only because we banked with them before), and are using that for the UK money. Haven't decided yet if it makes sense for us to use the 4 year tax free allowance over here, as I am not sure how interest income from abroad is taxed.

But if you live in the UK, would you not be taxed on off shore interest, and that would make it much less worth it?

Daniela

[Super_BQ]

To be above the board it really doesn't matter where you keep the funds as your taxation is based on which country you reside in. If you've demonstrated in the UK to sell your house, with the intention of leaving the country, then you can declare non-residency in the UK from the day you fly out.

I can not speak what % of 'withholding tax' the bank is required to take for the UK bank accounts. I do know that in NZ, non-residency foreign currency accounts are only taxed @ 15%. That is the NZ bank holding your foreign currency account is required to with-hold that % earned. The previous statement of 2% I am not aware of???

Normally, when you arrive in NZ and establish a residency, you're suppose to declare all your WORLD WIDE earnings (including interest from foreign currency accounts) on the tax return. Income outside of NZ is entered in the 'foreign tax credit' section which avoids the chance of being double taxed. A likely case if you paid more tax overseas (such as in the US where non-resident accounts withhold 33%), you may get a credit at the NZ end.

IRD does not care what currency or where you hold that bank account. But bet your boot they sure do care how much $ you have on and offshore once you become a resident.

Again I can't speak from a UK tax point of view. I've done tax courses when I studied in Canada and the tax act there is very clear that, "Someone has to be resident on some country" - meaning you really can't be a non-resident in both Canada and say NZ at the same time. Furthermore, being a resident in more than 1 country is also a possibility. If that is the case, then you file a tax return in both countrys filling out the foreign tax credit section which equalises any possible double taxation.

I hope this helps.

BQ

[Steven & Ann]

Dont make the mistake I made with barclays. I left it in a standard account, only to find they impose a limit on daily drawings. Now I cant move it anywhere in large quantities, and cant by spot rates, etc., and meet the deadlines.

[jryorkshire]

A couple of points in respect of the previous posts.

The only 2% tax rate I know of is the Approved Issuer Levy, but this is an alternative to paying Non-Resident Withholding Tax on interest PAID from NZ to abroad, as would be the case for a NZ resident paying mortgage interest to a UK Bank. So this doesn't apply to this post.

As for tax in the UK, once a non resident you would still be taxed on the income you derive from the UK (the UK get first taxing rights on this income), as Super BQ correctly states the tax rate would be restricted to the double tax agreement rate (being for UK/NZ no more than 10% tax). However, assuming you are UK or Commonwealth citizens you will still receive your UK personal allowances which will mean ultimately that you wont be paying tax on the first GBP5,225 each (assuming your both under 65) of the income interest you receive.

Finally, assuming you are first time residents of NZ (and will be able to claim the Transitional Residents Relief), for the first 48 months of your NZ residency you will not pay tax on your overseas income (excluding any earned income).

jryorkshire