[Mickstim]

I have read so many threads about money and off shore accounts etc. but being a bit thick about investments etc. am feeling more confused than ever.

If our house sale goes through we will have quite a large amount of dosh that we don't want to transfer to NZ until the exchange rate improves. So - the question is where to put it in the UK (or offshore) to get the best return?

We don't really want to tie it up for a year as we would like to be free to move it when the rate is right - so what do other people do?

All advice glady received!

[JandM]

Watching keenly, as our turn will come.

[actiongirl76]

Mmmm.. I'm currently in a similar position.
Sold the house in September and put the money away for 6 months in an offshore account....
Do I now put it away again for 6 months ...?

we're not planning to buy in NZ for at least 6 months to a year, so could tie up the cash..... but, like everyone else, I'm worried about the rate...

[thezorbster]

We used an Alliance & Leicester offshore account which at the time gave the best rate of interest for an offshore account where the money wasn't tied up for a set period of time. Might not be the best now but have you tried looking at something like Moneysupermarket to check out the best interest rates? There are a couple of similar websites that enable you to compare bank account interest rates, tie-ins etc so that may help you find a home for it.

[Belmont Babes]

Barb, will keep reading this post as in same dilemma. I have been looking at Barclays offshore, not sure about rates yet and still awaiting a ring back. ING Direct looks Ok at 6% aer???

[benhila]

The general idea is that if you leave your savings in a UK account you will be taxed at source (unless you earn less than your £5225 personal allowance, in that case you can ask for gross interest). On the other hand, if you go offshore and you are non-resident in the UK for the tax year, you receive your interest gross and are not liable to pay tax in the UK. You also do not pay tax (in NZ) on your overseas income for the first 4 years of your residency in NZ. So, it makes lots of sense to leave your savings offshore. If you do not want to tie them up for any length of time, go for an ‘easy access’ account rather than a ‘fixed rate’ account. You can earn 6%+ gross at quite a few ‘easy access’ offshore accounts (e.g. Nationwide).

[JandM]

Thanks for the explanation, Benhila.

[thezorbster]

A&L currently paying 6.3% for new investors, no notice required.

[Mickstim]

Thanks all! I thought that if you were earning interest in UK but not resident you could get it tax free. Do I have that wrong?? It's all so bloomin' complicated!!

Barb x

[Nick88]

From memory I think you can inform the UK Tax bods that you are leaving, and will no longer be a resident for tax purposes.

If you have enough money this bank is a good option

http://www.offshore.hsbc.com/1/2/home

They have branches all over the world, and it can all be done online. They are paying 7% gross.

[Mickstim]

That's a good one Nick - but unfortunately comes to an end on 31st March and I doubt if our money will be through by then.

I am coming up against a brick wall with our bank who say we can only transfer £10 000 a day. How on earth do we overcome that one if the money for our house is paid into our current account?? I am getting VERY confused!!

[benhila]

One way to go about it is to arrange for the proceeds from your house sale to go directly to an offshore account where the money will 'sit' and earn gross interest until you are ready to transfer it to NZ (when exchange rates improve).

[Red Devil]

... Alliance & Leicester 'eSaver' is a good rate, however you're limited to a maximum balance of £75,000.

We're pleased with the Lloyds TSB Internet Saver account... net interest paid monthly, access at anytime and also get a 1% introductory bonus :) for account over £100,000.

[Mickstim]

... Alliance & Leicester 'eSaver' is a good rate, however you're limited to a maximum balance of £75,000.

We're pleased with the Lloyds TSB Internet Saver account... net interest paid monthly, access at anytime and also get a 1% introductory bonus :) for account over £100,000.

We bank with Lloyds TSB but they said if we take their internet saver we can only draw £10 000 a day - have they told you different? Wouldn't mind as a rule but as soon as the exchange rate improves we want to transfer enough to buy a house.

I eventually opened an Allied & Leicester offshore e-saver today and that pays 6.3% with no upper limit. Our solicitor says he will pay directly into that for us - so unless we find a better offer we will use that.

My brain hurts after all this shopping around for banks - trying to cut through all their 'deals' to find out where the bottom line is can be quite tricky!!

Thanks so much to all of you for input!

Bx

[IanW99]

We bank with Lloyds TSB but they said if we take their internet saver we can only draw £10 000 a day - have they told you different? Wouldn't mind as a rule but as soon as the exchange rate improves we want to transfer enough to buy a house.
...


Interesting, are there more than one internet savings accounts at Lloyds?

This is what I was told when asking about transfer limits:-

With regards to your query about the transfer limits for this account, you can transfer £50,000 per transfer and you can do this as many times as you like each day. This means that there is effectively no daily transfer limit.

Not that it is much help for you?

Ian

[Mickstim]

Oh goodness I sat with the financial adviser at our local branch for about 20 minutes yesterday and she said £10 000 unless it's via CHAPS. Same for the current account. I am soooooooooo confused!!

[IanW99]

Oh goodness I sat with the financial adviser at our local branch for about 20 minutes yesterday and she said £10 000 unless it's via CHAPS. Same for the current account. I am soooooooooo confused!!

No you are probably right, bit of confusion between us :)

My quote is purely between the internet savings account and the current account from where you can transfer as much as you like.

But you are correct that transferring from the current account via the internet is limited to £10,000.

In our case we had previously set up a BACs transfer for the full amount that we wanted, which we then phoned the branch to initiate the transfer when we were ready.

So, you can keep all your money in the savings account and then transfer it all back directly before moving it to another bank.

Ian

[Red Devil]

... just to clarify, when we purchased our French property last year we simply popped into our local Lloyds TSB branch and set-up a transfer from our Internet Saver account over to our French bank account at an agreed fixed exchange rate, so we knew exactly what we'd be receiving at the other end... no fixed upper limit either for transferring.

I must add that our introductory bonus will soon be up, so I'm also looking at switching to another bank to take full advantage of introductory offers... although our Lloyds TSB branch manager said my wife can open a new Internet Saver account in her name and gain the 1% introductory bonus, so we may end up going down this route and staying with Lloyds TSB.

[Mickstim]

Doesn't it get messy? We don't know how much we will eventually want as it depends what we pay for a house and we want to leave the rest in the UK while we have the tax amnesty.

We have realised that the A&L account we have opened (good one at 6.3%) only allows us to transfer to one nominated account - so thinking of rather opening an ASB account in the UK as tranferring it to our Lloyds account will give us the same problem of £10 000 max.

My head hurts!!

[dharder]

You also do not pay tax (in NZ) on your overseas income for the first 4 years of your residency in NZ. So, it makes lots of sense to leave your savings offshore.

I'm sure you're all aware of this, but if you claim this exemption, you will not be able to receive working family tax credit here in NZ.

In our case, it makes financially more sense to pay tax on our interest here and qualify for the family tax credit. I think (oh dear. money and me...)

Daniela

[Red Devil]

... ditto, it certainly gets confusing :confused:

I'll be glad when we're settled, so we can get the lot spent :laugh

[thezorbster]

I eventually opened an Allied & Leicester offshore e-saver today and that pays 6.3% with no upper limit. Our solicitor says he will pay directly into that for us - so unless we find a better offer we will use that.

Bx

Just be careful with this - I think the money has to be transferred into and out of your 'nominated' bank account, ie, A&L may not accept the money being transferred directly from your solicitor to them because of money laundering etc. We had our money transferred into our nominated current account and then directly out of there into A&L.

[Red Devil]

... no problem with transferring the equity from our house sale into our Lloyds TSB Internet Saver account... just simply gave the account details to our solicitor... mind you, I was quick to check on-line that afternoon to see how much was in :)

[renew]

Hi folks,
Just to muddy the waters some more. It might be worth remembering what the current protection is if the bank you were to go all Northern Rock as I think some of us will have money in UK accounts for the foreseable future. From memory only the first £35,000 is guarunteed. Also this is per bank not per account so beware of various bank which are part of the same group...

http://www.moneysavingexpert.com/savings/safe-savings

[Mickstim]

AAAH!! Tearing my hair out now. The A&L info I have from them only says that I must sent TO a nominated account but doesn't say from. I guess I will have to check with them.

Actually - Northern Rock are offering a better interest rate offshore than almost anyone. I guess they are probably the safest place to be??

Daniela - we are retiring so don't need tax credits in NZ - so for us it is better to claim the tax amnesty.

Back to the drawing board .............

[Belmont Babes]

I am so so tired of the money side of things. I am thinking of sticking with my own bank as I do on line banking anyway and taking their offshore at 5.5%. That way I can manage my money online. They have informed me that I can transfer any amount at £25 per time. Is this steep? What are the benefits to using XE instead? Please help a frazzled woman:(

[renew]

hi,
The thing to check with your bank is the fee they hide in the exchange rate.A few cents less than the market rate can mean a huge amount if you transfering over the proceeds of a house sale. If you are looking at smaller regurlar withdrawls you could think about an acount with Nationwide which is the best for withdrawing money from ATM's abroad.

http://www.moneysavingexpert.com/cards/cheaper-spending-overseas

Renew

[Nick88]

Does the GBP10 000 limit apply to all money transfers out of the EU? If not, you could open an account with HSBC to receive the money from the house sale. This might enable you to transfer the money to another account in the offshore section much cheaper. The house money doesn't have to go into your normal bank account.

[gpbenton]

They have informed me that I can transfer any amount at £25 per time. Is this steep? What are the benefits to using XE instead? Please help a frazzled woman:(

It is a bit steep. XE or NZFOREX tend to be cheaper and give a better exchange rate, so you end up with more New Zealand dollars.

[red]

first of all let me apologise if I'm being a bit dim. I too am struugling to decide what's the best option!

If I put my house proceeds in an offshore account HSBC seem great, Barclays were only offering 5.44%:( then transfer it to XE or similar for transfer to NZ in a few months will the money have to come back in to the UK before transfer (in to my XE account). If this is so i have been told that once the money is back in the UK i am liable for tax on any interest I have earned offshore. So if this is the case then whatever bank I decide to go with I am tied to their exchange rate I guess.

any advice gratefully received before my head expoldes!

Thanks

[Mickstim]

first of all let me apologise if I'm being a bit dim. I too am struugling to decide what's the best option!

If I put my house proceeds in an offshore account HSBC seem great, Barclays were only offering 5.44%:( then transfer it to XE or similar for transfer to NZ in a few months will the money have to come back in to the UK before transfer (in to my XE account). If this is so i have been told that once the money is back in the UK i am liable for tax on any interest I have earned offshore. So if this is the case then whatever bank I decide to go with I am tied to their exchange rate I guess.

any advice gratefully received before my head expoldes!

Thanks

It's hell to decide, isn't it? We have opened an offshore account with Alliance & Leicester at 6.3%. We can only transfer into a nominated account, so have nominated our Lloyds TSB account. We plan to set up a BACS transfer from Lloyds to whoever we decide to do the currency exchange, and then once we want the money we transfer the dosh and phone LLoyds to activate the BACS. It all feels very complicated but we haven't found another way. Our money would not be in Lloyds long enough to gather interest - so don't think this is a problem.

Anyone see flaws in this scheme?? Please yell if you do!!

Bx

[Nick88]

HSBC Offshore should be able to handle all of the currency conversion and transfers for you. You might even be able to negotiate a better exchange rate if you wave the XE rate under their noses. Also if you bank more than GBP60k with them you have access to their Premier rates, which might be better. They are currently paying 7% on GBP denominated accounts. Whoops, just double checked and the offer runs out on the 31st, but it might still be negotiable.

There are plenty of savings accounts over here that pay +8% so it might be worth just moving the money and having the interest make up any short term glitches.

I have changed my view on the future of the NZ$, I did think it would stay high as interest rates are likely to do. But the economy is probably going to stall and the possibility of an exchange rate drop is going to cause the Uridashi uptake to tail off pretty quickly, so increasing the flight of capital and causing the exchange rate to drop. So the threat of the NZ$ dropping will cause it to drop.

It could be worth holding onto GBP for a while in a nice 7% gross account offshore and see what happens. It is not a brilliant time to do expensive things like buying a house at the moment, anyway.

[Mickstim]

Thanks for that advice Nick.We did try the HSBC account but as we will only get our money in April they will offer less than Alliance & Leicester.

We are keeping the money in UK until the exchange rate changes as we are taking the 4 year tax amnesty. We figure at the current exchange rate it's not worth moving it and we will rather rent for a while until it gets better. Glad to hear you think the rate will improve for us as this has been quite a worry!

Bx

[Carey]

Confused here also; as I understand it we can put money from house sale into offshore account eg Alliance & Leicester with nominated account here in UK. Then when we want to transfer, if we want to use XE for better exchange rate, we have to send the money by CHAPS to our nominated account before transferring to XE? But does that mean we'll have to pay tax on the interest and therefore negate all the interest earned while being off shore?
Is this correct? Can a nomiinated account be an on-line account?

Can't believe there isn't a simpler way!

[Carey]

Can anyone shed light on this thought: Why would we have to pay tax on interest earned in an offshore account because the capital is transferred to a UK account in the process of being moved via XE to NZ? Assuming we were resident in NZ while the interest was earned, surely the 4-year tax amnesty would apply?

[IanW99]

This is my take on the subject, i'm no expert though.

If you have money in an offshore account then any interest earnt is taxable in the country that you are tax resident in. So even if you stayed in the UK you would be liable to pay UK tax on your interest.

So if you put money into an offshore account whilst still resident in the UK then you would need to do a self assessment and pay the tax to the UK on any interest earnt whilst you remain resident.

Once you move to NZ and become resident for tax purposes then you would cease to pay tax on interest to the UK and would now be eligible for exemption from tax in NZ for 4 years.

Even if you temporarily transferred money back into the UK bank, it would have no bearing on this rule, even if you did earn some interest in the UK bank. You would of course have already informed the bank to not withhold tax.

See Tax on Foreign Savings and Investments (http://www.directgov.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnSavingsAndInvestments/DG_10013299) for more details.

Ian

[Steve_B]

If you have money in an offshore account then any interest earnt is taxable in the country that you are tax resident in. So even if you stayed in the UK you would be liable to pay UK tax on your interest.

So if you put money into an offshore account whilst still resident in the UK then you would need to do a self assessment and pay the tax to the UK on any interest earnt whilst you remain resident.


There does appear to be a way around this.

By the way, hello everyone :cheers

I have recently sold my business and will hopefully make the move to NZ once the OH passes her teaching degree in July 2009. The task was/is to receive an income from a decent sized pot of money without paying tax here in the uk until we depart to NZ and to then take advantage of the four year tax relief when we get there and.... do it legally :laugh

I know, it sounds an impossible proposition doesn't it? But, apparently it can be done. It may not suit everyone but for those that are in a similar position to myself or for those that have sold their UK house and are waiting for the exchange rate to improve it could be just what you're looking for and it's called an Offshore Investment Bond.

These Bonds would not suit a NZ resident but may suit UK residents who intend to emigrate to NZ in say 12 to 24 months (up to 20 years time) and as such are able to take advantage of the 4 year tax relief when they arrive there.

I started to write lines and lines of how the bond works but in fairness these are the key points worth knowing: -

You can receive up to 5% per year as an income
(up to a maximum of 20 years at this rate, i.e. 20 x 5 = 100% of capital deposited initially to open the bond)

Tax on the growth of the bond is defferred
(This is the key point as tax only becomes due in the year that you cash-in the bond and as you are likely to be in NZ at the time of doing so attracts zero tax)

Interest rates on these bonds is generally lower than what can be obtained in the high street, typically 5.10%, and are paid gross of taxation(depite the interest rate being lower, remember, your bond is increasing by the gross amount and for me, as a higher rate tax payer equates to something like 8%+ in high street terms)

If this method works out then I owe my IFA a debt of gratitude unless, of course, one of the family members fails the medical :exit

If anyone needs further help then I'll do my best but in fairness, I'm not a financial guru which is why I employ the services of someone that is. If my situation rings a bell with anyone else then I'd strongly suggest that you seek the services of an expert as it really would justify any initial expense.

Cheers all
Steve

[JandM]

Hello.:)

[Peter&Liz]

Northern Rock, which is now, in effect the government are offering 6% on their offshore fixed rate bonds.

http://www.northernrock-guernsey.co.gg/html/frbond/frbond.asp

My understanding and I am not a IFA is that you are not necessarily covered by FSCS protection (first £35,000 per person per Institution) for offshore accounts by UK Banks and Building Societies. Some banks do extend this protection some don’t.

So for those who want maximum protection for their cash, Northern Rock maybe worth considering even if you can get a better rate elsewhere.

Peter

[Steve_B]

So for those who want maximum protection for their cash, Northern Rock maybe worth considering even if you can get a better rate elsewhere.

Peter

Agree with your sentiments on Northern Rock Peter 100%.

Also, and I'm not scare mongering here, I've noticed a lot of people mention Alliance & Leicester which I have been specifically told NOT to invest with.

Please don't shoot the messenger :nice1

Steve

[holland]

;) Hi getting 13% off shore but tied in for 5years.but getting a good income off it,it all depends on were you see yourself in 12months time i suppose

[benhila]

I've noticed a lot of people mention Alliance & Leicester which I have been specifically told NOT to invest with.


Hi Steve

I have been chasing Alliance & leicester for over a month in a (so far unsuccessful) attempt to open an off-shore account with them. Can you please expand on why is it not a good idea to invest with them.

Many thanks,
Hila

[Carey]

;) Hi getting 13% off shore but tied in for 5years.but getting a good income off it,it all depends on were you see yourself in 12months time i suppose

13%, wow, that's good! Are you willing to tell us where? Pm if prefer.

[joeandsacha]

I'd also like to hear why you've been told not to invest with A&L.

We've just opened an offshore account with them to deposit the proceeds of our house sale in when we move over. They were slow to come back to me, so I rang them after a month and the account was opened straight away.

I'm about to start transferring money from our ISAs, savings etc into it so I'm curious to know why you've been told to avoid them!

Joe

[Carey]

I'd also like to hear why you've been told not to invest with A&L.

We've just opened an offshore account with them to deposit the proceeds of our house sale in when we move over. They were slow to come back to me, so I rang them after a month and the account was opened straight away.

I'm about to start transferring money from our ISAs, savings etc into it so I'm curious to know why you've been told to avoid them!

Joe

Giving this a bump as we're considering A and L but would like to hear why/if they're not a good idea?

[victoria24]

one piece of advice i would give is to spread the money about as the fsa rules only guarantee up to 33k per institution and in the current climate your money needs to be safe!
also be careful of "aer" which stands for annual equivalent rate. it doesnt really mean a lt cos the mechanics behind the calculation of it make the rate impossible to compare. ask a bank what its equivalent to and they get tied up in knots!

[Steve_B]

I've noticed a lot of people mention Alliance & Leicester which I have been specifically told NOT to invest with.


Hi Steve

I have been chasing Alliance & leicester for over a month in a (so far unsuccessful) attempt to open an off-shore account with them. Can you please expand on why is it not a good idea to invest with them.

Many thanks,
Hila

Hi, Sorry for the delay but only just read the Q's about A & L.

All I can say is that I am risk averse and have recently completed the sale of my business which meant that, with all the concerns over the credit crunch, I have insisted that my Financial Advisor steers me clear of any potential banking dramas we've all recently seen in Northern Rock. His immediate response was to avoid A & L at all costs. Whether he knows something that everyone else doesn't has yet to be seen and I didn't question him further. For what it's worth, the vast majority of my own funds are now with Northern Rock as it's one of the few places that you are guaranteed financial safety since it was nationalized. The downsides are the interest rates but for the sake of a % or two, I sleep at night.

If anyone saw Martin Lewis on ITV's Tonight program last week then you'll have probably noted how he was less convinced that a major financial institution wouldn't go under than he was before. Probably sensationalist reporting but it's still a bit scary out there....spin or no spin.

At my next meeting with the IFA I'll enquire further and ask why he spherically named A & L and report back.

Steve

[benhila]

Thanks Steve. I do hope that these are only rumors since we have a substantial amount with A&L. Ironically, we did open an off-shore account with them in order to spread the risk....

[Steve_B]

Just for your information, A & L lost more than 9% on its' share price today.

Incidentally, 'specifically' changed to 'spherically' on my previous post....unless I was drinking at the time, I'll blame the spell checker :yes

Steve

[benhila]

Hi Steve,

The 10% fall in A&L shares is the market's reaction to an anticipated cut of 30% in their next dividends. While they are not doing great just now I don't think that they will be following in the steps of Northern Rock. Thanks for the warning though.

Hila