Can an American resident (or other foreigner) open a sterling account at Northern Rock in the UK? While I appreciate there is currency risk, there is no bank in the US paying even 4 per cent with its “fully insured” guarantee. What about with other UK banks and building societies?
Kevin Mountford, the head of savings and current accounts at Moneysuper-market.com, the online comparison service, says that with its relatively high interest rates, the UK could look attractive to foreign savers. Often, however, banks and building societies build in criteria that restrict access to their accounts.
In the case of Northern Rock – offering savers up to 6.25 per cent as of the middle of this week – the bank says someone who wants to open an onshore UK account would need to have a UK address and be a UK taxpayer. And for Northern Rock’s Guernsey-based offshore accounts, also covered by the government guarantee, the bank requires prospective savers to have a UK passport and UK residency.
Among other big UK savings providers, generally to open onshore accounts savers need to have a UK address with formal ID, and for offshore accounts a minimum of a UK passport.
In the credit squeeze, banks and societies are keen to attract as much retail savings inflow as possible but they remain mindful of the tight regulations relating to money laundering.
I am a Belgian citizen and have been living and working in the UK for eight years. I have a Spanish girlfriend. All my assets, both movable and immovable, are in the UK but in coming years I expect to have an international portfolio. I want to draw up a will. Should this be done according to UK or Belgian legislation?
Andrew Tailby-Faulkes, tax partner at accountants Ernst & Young, says that right now it would probably be most appropriate to have a UK will as all your assets are here. This would also ensure that probate could be granted as quickly as possible in the event of your death, so that your executors could deal with your testamentary wishes without undue delay.
Even when your asset base becomes more international, it will probably be sensible to retain a UK will for any assets you keep here, for the same reason. If you have a foreign will covering all of your assets, including those in the UK, the legal process to get probate here is likely to take far longer. As a general rule, it can be more convenient to have a will in another country where you have significant assets as this usually helps with the administration of the estate in that country.
Your question also gives rise to a number of tax considerations. I assume that, despite being resident here for tax purposes, you
consider yourself to be
domiciled in Belgium. Domicile is a concept of English law. Consequently domicile is much more durable than mere residence, which can change from year to year.
There are some important developments taking place in the way that resident
foreign domiciliaries (”non-doms”) will be taxed in the UK in future which may impact you.
Firstly, in the event of your death, any assets situated in the UK will form part of your taxable estate, subject to inheritance tax at the rate of, now 40 per cent (subject to a tax-free allowance, called the nil-rate band, now £300,000 and rising to £312,000 for 2008-9). If you remain resident in the UK, you will eventually (when you have been resident in any 17 out of 20 tax years) become ”deemed domiciled” for IHT purposes, meaning that your worldwide assets and not just those in the UK will then be within the scope of IHT. Planning may be available to shelter any foreign assets from IHT but it would need to be undertaken before you become deemed domiciled.
Secondly, if you are indeed foreign domiciled, then you can now benefit from the remittance basis of taxation in respect of certain types of foreign income and foreign capital gains, meaning, broadly, that those items are only taxed when brought into the UK.
The rules on the remittance basis will significantly change from April 6 and will be far less generous than they have been. The headline change which has been discussed at length in the media is the imposition of a fee of £30,000 a year for non-doms who have been resident in the UK for seven or more tax years, and who wish to claim the remittance basis, rather than paying UK tax on their worldwide incomes and gains. Those claiming the remittance basis will also lose entitlement to UK personal income tax allowances and capital gains tax annual exemptions.
Because you have been resident in the UK for eight years, this change applies to you, and therefore from April 6 you will have to decide each year whether you have sufficient foreign-source income which you don’t wish to remit to the UK to make paying the £30,000 fee worthwhile.
