Think offshore savings accounts and the super-wealthy normally springs to mind. However, offshore savings accounts are not just for those with huge pots of money – accounts are available for many Britons who live or work abroad.

What are offshore accounts?
Offshore savings accounts are most commonly held in the Channel Islands, the Isle of Man or Ireland. Many high street banks and building societies have subsidiaries that offer offshore accounts so consumers are able to pick names that they are familiar with. There are many private banks that also offer offshore account however many of these stipulate minimum opening balances, normally in the region of £5,000 to £10,000.

Offshore Banking Advantages
There are a number of advantages to banking offshore. Many offshore accounts are multi-currency meaning that you can withdraw your money in a number of different currencies easily – this extends to drawing cash and writing cheques which can be useful if you travel a lot or your business works with a lot of different currencies.

Interest on offshore accounts is paid gross without income tax being deducted however you must declare any interest as income on your self-assessment tax forms. However, this can be an advantage because the time deferral on the payment of the tax can benefit people with large savings pots as the interest is paid on the gross ensuring a larger final payout.

Offshore Banking Disadvantages
Offshore accounts are not covered by standard UK Financial Services Compensation Scheme. If you are worried about this, check the terms and conditions associated with offshore accounts of subsidiaries of high street banks and building societies as some say that any liabilities that are not met by their subsidiary will be met by the bank/building society themselves.

Offshore Account Types
There are many different types of account to choose from – from notice accounts to fixed-rate to easy access. There may be a variety of ways to access the account including telephone banking, internet banking, branch banking or via the postal service.

As with any financial account, it is important to pick the one that is right for you as there are plenty of different features available. As well as savings accounts, there are also offshore investment accounts.

Some people like offshore accounts as a way of reducing inheritance tax liabilities – money can be put in trust for children or grandchildren with the fund only liable for tax when the money comes back to the UK. This means that although the tax will be payable, the money has been rolled up untaxed meaning that the fund will have grown faster. As long as the child is not a higher-rate tax payer, the tax due will be at the basic rate and, as long as the person who setup the account has had it for seven years or more, there will be no inheritance tax to pay.

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