Broadly speaking, an offshore savings account refers to a savings account that is held in a country other than that which the saver resides in. Depending on your circumstances an offshore savings accounts could earn savers slightly higher returns than that of a regular UK-based savings account.
Offshore savings accounts tend to be available in either the form of a notice account or an instant access account.
It is important to remember that, as well has having considerable advantages, offshore savings accounts will also have disadvantages. You may, therefore wish to consider the following:
- Lets you save in currencies other than Sterling
- Due to the fact that there will be a delay in you paying income tax, you could effectively save more
- Returns could be higher due to the fact that interest is paid on the ‘gross’ balance rather than the ‘net’ balance
- If there is an option to defer interest payments, you could choose to receive them at a time convenient to you regarding tax
- Required deposits may be high
- Account running fees could be expensive
- Savings will not be protected by the UK government in the case that the bank collapses
- You could be taxed twice, though this is dependent on the location of your account
Remember to always weigh up the pros and cons of any individual offshore savings account deal you come across as you do not want to rush into something only to find out it does not suit your needs.