[Rabbit]

With the new 4 year tax amnesty for new residents on externally held investments, just wondering if anyone has considered opening an offshore account? - rather than getting slammed for the marginal rate withholding tax on interest in NZ?

Not sure what to do about my UK interest bearing accounts, I suppose move them to the Isle of Man.

[Carol]

With the new 4 year tax amnesty for new residents on externally held investments, just wondering if anyone has considered opening an offshore account? - rather than getting slammed for the marginal rate withholding tax on interest in NZ?

Not sure what to do about my UK interest bearing accounts, I suppose move them to the Isle of Man.



Can you put that into "easy" terms for me Rabbit.....

I'm a bit thick!

[Rabbit]

People who arrive in NZ as a new resident after the 1st of April are entitled to certain tax advantages, e.g. I believe one does not have to declare overseas held interest bearing accounts or unit trusts for the first four years.

I have an interest bearing account in NZ and I pay 39% witholding tax on the interest. My thought was to get an offshore account to get round this. Offcourse subject to being legal and within the rules.

After four years in NZ, as a new resident, externally held property rental income (e.g. UK Property), interest bearing accounts, unit trusts, ISA's, Pension funds etc become fully taxable at the marginal rate e.g. your top rate of tax.

In simple terms, I only want to pay tax when I have to. The monthly interest gained on my Kiwibank account is subject to 39% tax at source as that is my marginal rate. If I can get round this legally then I should try to do so.

I just hope after 4 years, they do not try to tax the capital growth of my personal UK pension fund and other holdings e.g. unit trusts, even though I will not be drawing it. The tax would be more than my current salary and a good insentive for going home.

http://www.ird.govt.nz/yoursituation-nonres/move-nz/temp-tax-empt-foreign-inc.html

[Cardiff Irons]

I suppose one consideration is that the NZ savings rates are that much higher than UK rates at the moment, so it could negate any advantages.

Not sure about offshore accounts, do you mean putting them outside the UK or would UK accounts become "offshore" once you move to NZ? You mentioned IOM, is there an advantage in putting your money there? I'd assumed that if you lived in NZ you wouldn't need to pay tax on UK accounts, but from what you've said it seems I may be wrong.

Oh oracle of financial wisdom, please enlighten me further :yes.

Cheers Rabbit.:nice1

[Rabbit]

What I was getting at was about opening an offshore NZ Dollar account for use in NZ (via an ATM?) to ommit paying the tax at source on interest in NZ as it would be a foreign held investment. This would reduce the amount of tax I currently pay on interest credited to my NZ current account.

Also I am thinking of moving my UK Sterling accounts (currently interest taxed at source in the UK at 22%) to a durisdiction where they will receive interest gross. e.g. bradford and bingley in IOM. Based on the rules as a recent NZ immigrant this would not be liable to tax in NZ or the UK.

Obviously, subject to this being compliant with the rules.

[Trigirl]

You don't need to move your UK accounts. If you are resident in NZ then fill out form R105 and give it to your UK bank - they will then pay you interest without tax taken off.

http://www.hmrc.gov.uk/pdfs/r105.pdf

I just hope after 4 years, they do not try to tax the capital growth of my personal UK pension fund and other holdings e.g. unit trusts, even though I will not be drawing it. The tax would be more than my current salary and a good insentive for going home.

This one has been bothering us for a while. Its difficult to get any firm answers on what is likely to be subject to tax on capital growth but it appears that unit trusts isa's etc will be and pensions may be depending on the type of pension (some employer schemes seem to be exempt).

[Avalon]

You don't need to move your UK accounts. If you are resident in NZ then fill out form R105 and give it to your UK bank - they will then pay you interest without tax taken off.
.
This is what we have done - but I was under the impression that if you do it this way - you should still declare the interest to the NZ revenue and pay tax on it here. Whereas if it is in an "offshore account" such as in the IOM, or Guernsy - then you dont have to pay the tax in either country.

I do have to be honest here and say that this os one area that I am still at sea on - but in our case as yet we dont have enough money left in teh uK to make it an issue for us.

HSBC run an offshore account if that helps anyone, and if you buy the International Express (it does have some use - honest) they publish a list of bast rates for offshore savings accounts.

as does Moneyfacts - a Uk based site. Also has a page on explaining Offshore Accounts. I should read it myself I think :D
http://www.moneyfacts.co.uk/menus/main/menu_offshore.htm

[Trigirl]

This is what we have done - but I was under the impression that if you do it this way - you should still declare the interest to the NZ revenue and pay tax on it here. Whereas if it is in an "offshore account" such as in the IOM, or Guernsy - then you dont have to pay the tax in either country.

If you arrived before the 1st April then you don't pay tax on overseas income for 4 years regardless of if its in the UK/IOM/Guernsey

If you arrived after 1st April (or when your 4 year exemption is up) you pay NZ tax on your worldwide income. That includes Guernsey/IOM etc. So its irrelevent whether your money is in the UK or "offshore".

Hope that helps.

We are also planning on taking pretty much all our money with us to NZ (proceeds from sale of the house mostly) but its the long term tax sheltered investments that are concerning me. Pensions and ISA's that we have worked hard to build up do seem to be under significant threat from the proposed new tax regime.

[marcia]

Can you 'stash' money in your childrens savings accounts, they don't pay tax?

Just wondered, I'm certainly no expert!

[KD17]

I've already got my offshore bank account, having been living on the IOM for the past 7 years. I plan on keeping it for a while to come yet as they are not that easy to open, so I'm not sure you could just "switch" your savings account from the UK to IOM without being resident here. I had to jump through hoops myself as an IOM resident just to open my regular account to have my salary paid into, and it's got a lot worse since.

Although all donations gratefully received :D

We're forever getting e-mails (spam) from across the world asking us to invest their money in our bank accounts, I could be rich by now, or in jail for money laundering :roll :p

The interest rates here are pretty rubbish though, so although you may pay less in taxes you don't get as much in interest.

I'm not too sure on the legalities of this one as it's an absolute mine field, but what is also important is not where you are resident, but where you are domiciled. I learnt a little about that a while ago, and was told that if I had any account in the UK I would be liable for any Capital Gains/Inheritance Taxes as I would still be deemed to be "domiciled" there. So I closed all UK links - but it could be that a little knowledge is a dangerous thing when it comes to financial advising...

I would be interested to know how you get on switching UK accounts to an IOM based account.


Debby & Keith

[diforsyth]

It's actually very simple to set up an offshore account provided you actually live offshore. By that I mean, if you permantly move outside the UK and have sufficient, legally gained, money for the minimum balance you can just open an account subject to all the KYC checks (Know Your Client - ensures you're not politically exposed or a known criminal etc.).

The problem is the type of accounts you can open. I suspect KD17's problems with opening an account were to do with a current account. Traditional offshore accounts are based around long term savings and minimal transactions.

I've worked in Abbey International (the UK's offshore subsiduary) in Jersey for the last 10 years. I work in IT but I do know the right people to ask if you have any particular banking questions, so just PM me. Note, a bank will not offer any tax advice, they will advise you to speak to a tax specialist.

David.

[coxy]

You don't have to be offshore to set up an offshore account. I set one up with no problems at all. All very straight forward.

The only real advantages to an offshore account are that they are used to dealing with people who are not resident, and that you can often get a better interest rate (currently 4.7% with Nationwide International (the offshore arm of nationwide))
The only thing to be aware of is the European offshore savings tax directive ( I think that's what it's called). Just get your interest deferred until you get to NZ.

Another thing to check is that your UK current account doesn't require you to make regular payments (>£1000) into it. This seems to be the case for a lot of the online banks.

[jdbob]

I have an offshore Euro account at HSBC in Jersey but so far I've been unable to transfer any money into it. It seems the wire transfer requirements (the addition of a cover payment MT202) is beyond the capability of my local bank. Except for that little detail it was just a matter of posting them proof of identification and residency (utility bills and bank statement). There is a third bank in town so I'll have to see if they are any more skilled in international payments.

Nationwide International has some advantages, especially when it comes to interest rates but they don't seem to have any competent web server programmers there :(