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Old 20.10.2008, 12:04
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offshore banking

This isn't specifically related to Switzerland, but since there are lots of British expats in Switzerland I figured I might try to ask here.

I used to live in England (I am not British but still EU), and had and still have a bank account with Barclays UK. I have recently moved out of England, to Switzerland. I have heard that under those circumstances Barclays offers after a few years of relative inactivity to automatically transfer the account to Jersey or the Isle of Man, and that there is nothing illegal with this (ifyou have moved out of the UK). I have also heard that this process can be accelerated and prompted by the client. Is this true? Who should I contact? Also, what difference does it make if an account is in the IoM, Jersey or Guernesey?
Thank you for any leads...
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  #2  
Old 20.10.2008, 12:48
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Re: offshore banking

Anybody can move their bank account to an offshore bank, any time they want to, whether they live in the UK or not. Your nationality and your country of residence makes absolutely no difference. I have never heard that a bank will do this automatically on departing the UK so you will have to make the first move. All you have to do is contact your UK bank and they should explain what you have to do to transfer to an offshore account like providing contact details in IOM or Jersey etc. In practical terms there no difference between IOM or Jersey/Guernsey but you may want to check what you might be giving up in terms of depositor protection because guarantees given to onshore UK bank accounts doesn't apply to offshore bank accounts.
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Old 20.10.2008, 14:57
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Re: offshore banking

Bradford & Bingley (deposits now owned by Santander) just announced same protection for off as on shore. Having taked my funds back on shore am now going to move them back to IoM and of course avoid paying tax.


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Anybody can move their bank account to an offshore bank, any time they want to, whether they live in the UK or not. Your nationality and your country of residence makes absolutely no difference. I have never heard that a bank will do this automatically on departing the UK so you will have to make the first move. All you have to do is contact your UK bank and they should explain what you have to do to transfer to an offshore account like providing contact details in IOM or Jersey etc. In practical terms there no difference between IOM or Jersey/Guernsey but you may want to check what you might be giving up in terms of depositor protection because guarantees given to onshore UK bank accounts doesn't apply to offshore bank accounts.
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Old 20.10.2008, 15:21
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Re: offshore banking

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Bradford & Bingley (deposits now owned by Santander) just announced same protection for off as on shore. Having taked my funds back on shore am now going to move them back to IoM and of course avoid paying tax.
The Isle of Man offers guarantees of deposits up to 50,000. That's not the same guarantee as the 50,000 UK Financial Services Compensation Scheme administered by the FSA for onshore deposits. Different guarantors surely?
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Old 20.10.2008, 15:55
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Re: offshore banking

Here is the text from B&B letter. I have written to them to spell it out in detail but assumed that this covers 50000GBP. 2 weeks ago I checked IoM guarantee scheme and this only covered 15000GBP. Now this should be up to 50000 as part of Abby/Santander scheme underwritten by HMG .



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I’m delighted to be able to confirm that all Bradford & Bingley International deposits carry the full and unconditional guarantee of Abbey National plc (Abbey). Additionally you have the reassurance of knowing that we are now part of the Santander Group, one of the ten largest banks in the world by market capitalisation with 70 million customers worldwide. Santander has a AA / Stable credit rating from Standard & Poor’s.
-----------------------------------------------------------------------
I know I can speak on behalf of all the team at Bradford & Bingley International when I say that we are looking forward to our future as part of Abbey and the Santander Group.






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The Isle of Man offers guarantees of deposits up to 50,000. That's not the same guarantee as the 50,000 UK Financial Services Compensation Scheme administered by the FSA for onshore deposits. Different guarantors surely?
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Old 20.10.2008, 16:46
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Re: offshore banking

IOM Barclays is good because you can do international transfers via online banking which you can't (with my account at least) with UK Barclays. IOM Barclays used to have a GBP 10K minimum balance to open an account unless you are an IOM resident. I would look very carefully how the IOM deposit protection scheme is funded however and how many years it takes to pay out... http://www.gov.im/fsc/investor/dep_comp.xml

To get the best of both worlds, keep your GBP in UK Barclays or other UK banks that are part of the fast payments scheme that are covered by UK deposit protection and transfer (instantly) to your IOM Barclays account to send it on to whereever you want. UK Barclays will pay interest gross if you tell them you are non resident.
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Old 20.10.2008, 16:56
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Re: offshore banking

"Bradford & Bingley (deposits now owned by Santander) just announced same protection for off as on shore. Having taked my funds back on shore am now going to move them back to IoM and of course avoid paying tax."

evade tax you mean?
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Old 20.10.2008, 17:05
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Re: offshore banking

I don't get it. Everyone on the UBS thread is worried about the fact that Switzerland doesn't have a big enough economy to back all the assets at UBS or CS, yet you all seem to think that the IoM guarantee is worth more than the electronic ink used in that webpage?

In my understanding, if people suddenly started to pull money out of those off-shore accounts (say because the EU successfully coerces them to follow stricter banking policies), the snowballing effect of a bank run would be even worse since banking is pretty much all those off-shore banking locations have going for them (along with tourism, sure).
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Old 20.10.2008, 17:12
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Re: offshore banking

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To get the best of both worlds, keep your GBP in UK Barclays or other UK banks that are part of the fast payments scheme that are covered by UK deposit protection and transfer (instantly) to your IOM Barclays account to send it on to whereever you want. UK Barclays will pay interest gross if you tell them you are non resident.
But if the OP is non resident and keeps his deposits onshore UK, interest earned on those deposits will be classed as UK sourced income and therefore subject to UK income tax even if it's paid gross. I think he would prefer to hold the deposits in an offshore account so that it's not counted as UK sourced income.

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Here is the text from B&B letter. I have written to them to spell it out in detail but assumed that this covers 50000GBP. 2 weeks ago I checked IoM guarantee scheme and this only covered 15000GBP. Now this should be up to 50000 as part of Abby/Santander scheme underwritten by HMG .
IOM increased the guarantee from 15,000 to 50,000 a couple of weeks ago. But that system is standalone from the UK guarantee for onshore deposits. I'm pretty certain Santander Group can't extend the benefit of the UK compensation scheme to offshore depositors. Of course any guarantee is better than none but the strength of the IOM scheme depends on how it's funded. As mjnnl says, I'd look into that closely if it's important to you. All the press release is saying is that you have the guarantee of Abbey National. If B&B IOM go bust then you can look to Abbey to pay under their guarantee but that's worth what Abbey is worth. On the face of it you don't even seem to be getting the explicit guarantee of Santander. You won't be able to look to the UK compensation scheme

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"Bradford & Bingley (deposits now owned by Santander) just announced same protection for off as on shore. Having taked my funds back on shore am now going to move them back to IoM and of course avoid paying tax."

evade tax you mean?
No. If Cricketer is non UK resident he won't be subject to UK income tax on offshore UK deposit interest.
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Old 20.10.2008, 17:14
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Re: offshore banking

Wrong!!
it is quite legal and therefore "evade" is the wrong word to use. "avoid" is the correct term.
in any case why should i pay UK tax as i am not resident and do not benefit from it?
i have paid tax long enough in the UK and here for that matter to cover my costs



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"Bradford & Bingley (deposits now owned by Santander) just announced same protection for off as on shore. Having taked my funds back on shore am now going to move them back to IoM and of course avoid paying tax."

evade tax you mean?
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Old 20.10.2008, 17:26
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Re: offshore banking

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I don't get it. Everyone on the UBS thread is worried about the fact that Switzerland doesn't have a big enough economy to back all the assets at UBS or CS, yet you all seem to think that the IoM guarantee is worth more than the electronic ink used in that webpage?

In my understanding, if people suddenly started to pull money out of those off-shore accounts (say because the EU successfully coerces them to follow stricter banking policies), the snowballing effect of a bank run would be even worse since banking is pretty much all those off-shore banking locations have going for them (along with tourism, sure).
Looking at the Manx government website it appears that the IOM guarantee fund is funded from levies made of other licensed deposit takers in the IOM, not the Manx government ie the guarantee depends on contributions from the Manx banking system not the government or taxpayer. There is no standing fund. It's only activated in the event of a bank failure.
http://www.gov.im/fsc/investor/dep_comp.xml
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Old 20.10.2008, 17:53
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Re: offshore banking

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But if the OP is non resident and keeps his deposits onshore UK, interest earned on those deposits will be classed as UK sourced income and therefore subject to UK income tax even if it's paid gross. I think he would prefer to hold the deposits in an offshore account so that it's not counted as UK sourced income.



IOM increased the guarantee from 15,000 to 50,000 a couple of weeks ago. But that system is standalone from the UK guarantee for onshore deposits. I'm pretty certain Santander Group can't extend the benefit of the UK compensation scheme to offshore depositors. Of course any guarantee is better than none but the strength of the IOM scheme depends on how it's funded. As mjnnl says, I'd look into that closely if it's important to you. All the press release is saying is that you have the guarantee of Abbey National. If B&B IOM go bust then you can look to Abbey to pay under their guarantee but that's worth what Abbey is worth. On the face of it you don't even seem to be getting the explicit guarantee of Santander. You won't be able to look to the UK compensation scheme



No. If Cricketer is non UK resident he won't be subject to UK income tax on offshore UK deposit interest.
Not for UK tax as IOM is not in UK but you would declare the interest on your Swiss tax return and be taxed this way presumably?
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Old 20.10.2008, 19:56
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Re: offshore banking

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Wrong!!
it is quite legal and therefore "evade" is the wrong word to use. "avoid" is the correct term.
in any case why should i pay UK tax as i am not resident and do not benefit from it?
i have paid tax long enough in the UK and here for that matter to cover my costs
So can we assume that you are paying Swiss taxes on it then??? otherwise 'evade' is the correct word

Jim
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Old 20.10.2008, 22:45
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Re: offshore banking

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But if the OP is non resident and keeps his deposits onshore UK, interest earned on those deposits will be classed as UK sourced income and therefore subject to UK income tax even if it's paid gross. I think he would prefer to hold the deposits in an offshore account so that it's not counted as UK sourced income.
I believe that your personal allowance still counts in this case (GBP 6035 for 2008/2009 for most people http://www.hmrc.gov.uk/rates/it.htm) so if your savings account is earning 5% gross then you can have just over GBP 120K in your UK savings account before the interest will be over your personal allowance.

One nice feature of the IOM Barclays accounts if you are paying Swiss tax is that you can elect when to be paid interest (so you could defer it for 10 years if you want http://www.barclays.com/internationa...t_account.html) if you want to elect when to pay income tax on it. However, you'll still pay wealth tax and I think the IOM deposit protection scheme is 'insufficient' if something the size of Barclays goes under.
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Old 18.10.2011, 15:47
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Re: offshore banking

Offshore banking centers and tax havens facilitate tax competition that is induces national governments reduce taxes and make business environment more favorable for businesses. That in turn translates into higher economic growth. So offshore banking benefits everyone ordinary people and HYIPs.
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