Uk Government Prepares Offshore Bank Account Tax

[%age]

Times Online 11th December 2008

(I know there are similar threads rather than make a new one but anyway...)

 

The article uses the words 'tax haven' and 'Isle of Man' from the outset.

 

A tax to fund a deposit protection scheme? It sounds nice but isn't all this a move to level the playing field for investment right across the board. Once you start reducing the element of risk then investment management starts to become pointless and holding back some interest at source is going to turn people away from the offshores, which is obviously the intention.

 

See, the UK Government will be appearing to help offshore investors and in thw same breath deter them from investing with the likes of IoM.

 

Also, when such a fund accrues, what happens to the cash? It has to be spent on something at sometime.

 

I know, perhaps the occasional bank could go bust to make use of the fund, just to show the scheme actually works.

 

I think all this is going to get very, very messy.

[oldmanxfella]

Times Online 11th December 2008

 

Potentially I think that this could be a great idea for the IOM. Anyone in Europe who holds an account in the IOM is already either having their interest disclosed or is paying a retention tax at 20% anyway and the UK gets a share of that; so if done correctly this could further legitimise the status of offshore deposits and provide a USP that would assist the offshore banks to expand more into overseas markets.

 

Maybe the UK now accepts the role that offshore banks play in funnelling cash into their UK parents and has decided that as long as this is done on its terms its not necessarily a bad idea that would bring more cash into the UK banking system during a liquidity crisis and a major recession.

[keyboarder]

It shouldn't affect the position of those ex-pats who are working abroad and are unable to open accounts in the UK, a position that has been bandied about muchly of late. Presumably, by proving the legitimacy of this circumstance the tax would be able to be claimed back anyway. It could actually be quite good for the island's finance sector.

[Gladys]

You have to ask why expats can't open banks accounts in the UK? AFAIK you don't have to evidence a UK address to open a bank account in the UK, just be able to evidence your residence, wherever. I suspect this is a bit of a red herring.

[Tugger]

I rather suspect that the expat's position is as a result of the banks simply not being arsed. Unless you are wealthy, if you don't fit conveniently into a box it's not worth the hassle factor

[Cronky]

I rather suspect that the expat's position is as a result of the banks simply not being arsed.

 

Have a look at the Foreign and Commonwealth Offices's advice for living overseas:

 

GOING TO LIVE ABROAD

 

Once you are no longer resident in the UK, different taxation rules apply depending on your country of residence. You may want to seek independent tax advice and consider the benefits of offshore banking before you retire abroad. An offshore bank account can play an important role in helping to minimise your tax liabilities. Additional benefits may include asset protection, estate planning, confidentiality, security, and the ability to deal with English-speaking professionals who understand culture sensitivities and the unique needs of expatriates.

 

So there you are. From the horses mouth, we need offshore centres for expats so they can bank in sterling.

[The Old Git]

Would this offshore bank account tax also apply to those people living "offshore" on the IOM?

 

I'm not too clear on how the UK Govt can tax me

[manshimajin]

You have to ask why expats can't open banks accounts in the UK? AFAIK you don't have to evidence a UK address to open a bank account in the UK, just be able to evidence your residence, wherever. I suspect this is a bit of a red herring.

I did try opening an account in the UK at one time and was told by the bank that I needed to be resident in the UK with the usual evidence - passport, and UK utility bill in my name. If it is a red herring some UK banks use it.

[Gladys]

Well, of course a bank can decide who it will have a relationship with and who it will not; it is the banks' own regulation, not some law. So is a red herring.

 

Looking at it another way, if I was resident in the UK and had a bank account, would my bank close it if I moved away? (In fact, I did and they didn't try to close my account, but I wanted to open an account near where I lived!)

[The Old Git]

I did try opening an account in the UK at one time and was told by the bank that I needed to be resident in the UK with the usual evidence - passport, and UK utility bill in my name. If it is a red herring some UK banks use it.

 

I opened a UK bank account a few years ago with Smile (part of the Co-Op)

 

They don't even tax my interest at source, I get it gross.

 

There seems no clear reason why expats can't keep their UK bank account and yet their govt encourages them to open offshore accounts

[Onchanguy]

You have to ask why expats can't open banks accounts in the UK? AFAIK you don't have to evidence a UK address to open a bank account in the UK, just be able to evidence your residence, wherever. I suspect this is a bit of a red herring.

 

I think you'll find this is a UK banking law and you do require a UK address to open an account in the UK. I have worked in banking for the 11 years I have lived here and we obviously get numerous expats wanting UK accounts that cannot get them so they come offshore.

[manshimajin]

Alistair Darling says:

They (crown dependencies, such as the Isle of Man and Channel Islands) attract banking customers with lower taxes, without contributing to the UK Exchequer. The British taxpayer cannot be expected to be the guarantor of last resort.

If his rationale for refusing to be GLR is non-contribution to the UK Exchequer is he also saying that depositors who pay witholding tax to the UK Exchequer from their Crown Dependency accounts can expect the UK to be guarantor of last resort as they have actually contributed to the UK Exchequer?

 

Now that would be an interesting development.

[The Old Git]

I think you'll find this is a UK banking law and you do require a UK address to open an account in the UK.

 

But as I said in the previous post, I opened an account with a UK bank and I have an IOM address. They know I don't live in the UK or pay UK tax because I gave them a certificate from the IOM Govt saying I was an IOM tax payer.

[oldmanxfella]

You have to ask why expats can't open banks accounts in the UK? AFAIK you don't have to evidence a UK address to open a bank account in the UK, just be able to evidence your residence, wherever. I suspect this is a bit of a red herring.

 

I think you'll find this is a UK banking law and you do require a UK address to open an account in the UK. I have worked in banking for the 11 years I have lived here and we obviously get numerous expats wanting UK accounts that cannot get them so they come offshore.

 

I think that you find that 11 years banking experience or not you don't have a clue what you're talking about. Its not UK Banking law at all - it's policy on behalf of most banks because of anti money laundering rules and problems credit scoring those with non UK addressess for UK banking services that's all. The fact is most banks prefer to shunt their non UK clients to specialist overseas centres who are used to dealing with expats. There is no "law" or otherwise that states that you can't set up a UK account for someone with no UK address.