Thanks to someone on here, I opened (with no problems at all) an Alliance and leicester offshore e-saver account
- see http://www.alil.co.im/offshore-sterling-ac...ver.aspx?bhcp=1

The rate has gone up to 6.4% (though they didn't tell me it was increasing) post the last bank rate increase. seems they will adjust for interest rate increases.

Glad your happy with it Devon , not for me though 6.25% + all over the place now with other banks/building socities , you and others might like to know this .................

Less than half the FSA cover

Are there any advantages specific to off-shore accounts[1], or is the choice just down to interest rates like it would be when comparing 'domestic' accounts?

[1] Lower compensation disadvantage duly noted!

Deferred tax payment.

Meaning?

You can choose which year you'd like to pay tax in. You're still eligible for the same amount of tax, i.e. 20% or 40% depending on your earnings, but you could choose a year when you hadn't earnt anything from PAYE for example, and receive up to around 6000 tax free courtesy of your personal tax allowance.

Basically what you're doing is rolling over the tax due into the next year, the year after that and so on. As some point you have to pay it, and for most people, rolling it over 3 years say and paying 3 times as much (keeping you in the same, say 20% tax band) is no different to paying it every year, still within the 20% tax band.

You could do something very stupid and roll it over for so many years that when you eventually choose to pay it, the amount due takes you into the 40% tax band.

Or, as I said before, you could do something clever and plan for a year when you don't consume all of your personal tax allowance or your tax status changes for another reason (full time student?) and take the interest then.

Thank you for the explanation, but I think this just became too complicated for my feeble brain!

don’t forget you get interest on the amount that would have been taken by tax too


for example you have 100k here at 6%. that is £6000 interest, but 20% is taken out for tax so your left with £4800. so the second year you have 104.8k in the bank and get 6% interest on that


but offshore, you get 106k at the end of the first year, and then 6% interest on 106k apposed to 104.8k

Blimey. You're right. I hadn't thought of it like that. So even if your tax circumstances don't change, provided deferring for "n" years doesn't change the tax band you'll pay tax in, you'll get "n" years of compounding at the gross rate.

You wonder why people bother with trying to get 10% YOY from the stock market paying 40% tax when realising their capital gains in cash, when you can get effectively more than this right now, YOY, for no risk, just by saving offshore.