Expat financial advice from the experts

UK savings account while living abroad

uk savings account while abroad

UK savings account while living abroad

For any British expat planning on returning home, holding some form of UK savings accounts while living abroad is often a priority.

The UK financial market, regulated by the Financial Conduct Authority FCA offers peace of mind knowing you are protected by UK legislation. Factors such as your monies are safeguarded up to £85, 000 in the event of bankruptcy (under the Financial Services Compensation Scheme) and knowing the FCA set the benchmark for the client protection is a huge pull. The problem is that often, UK saving solutions are for UK residents, therefore require a UK address and solely in GBP. Thus meaning, that they may not be available and open to large currency risk, making you liable to FX fluctuations at that given time.

Furthermore, upon analyzing the current offering, with interest rates so low and staying that way for the foreseeable future, the return on deposit accounts does not even keep up with inflation.

Within this article, we intend to review the current offerings, digging deeper into the pro’s and cons whilst assessing other options available.

UK Savings Account Options

ISA – Individual Savings Account

An ISA is the classic UK savings account for those who reside in United Kingdom. There are 4 types of ISA, Cash, Stocks and Shares, Innovative and Lifetime. The key benefits are that you do not pay tax on:

  • the interest on cash
  • income or capital gains

You are however limited with the amount you can put in. Importantly you cannot contribute to your ISA after the tax year you move and must inform your provider the moment you stop being a UK resident. You do not need to encash the ISA and you do still get UK tax relief on the money and investments within. In short, these are usually best left as they are if you intend to return however it doesn’t help with further regular contributions.

Standard UK Bank Savings Account

The traditional savings account from high street banks which were once so common and opened at a young age is no longer an enticing prospect due to interest rates being so low. In previous years with most banks and building societies you could get 5% return in a fixed rate savings account, with essentially no risk, they worked great. But with the current best offer on the market place offering just 1.35% per annum (UK Residents only) the future looks bleak. Compounding the difficulty is the fact that the majority of retail banks in the UK will no longer take deposits from non-UK residents.

The alternative is an offshore British bank account (offshore savings account) but since the Panama papers scandal, they are more reluctant to accept clients from outside of their jurisdiction. Offshore banks also tend to require a minimum balance of £50,000, have high running costs and offer minimal interest rates. Thus resulting in the same outcome, little to no growth but now requiring a sizeable amount of money just to setup.

What is the alternative?

There is no definitive answer to this question are it is dependant on the saver and their intentions. An option being utilised more and more, however, is a ‘Global Investment Account‘ (GIA). There are numerous products on the market but if we try to focus as on our initial requirements / key factors i.e

  • A UK product or UK regulated Product
  • Easy access
  • Ability to add regular or lump sum contributions as a non-UK resident and as a UK resident if returning
  • Access to these funds with no penalty as a non-UK resident
  • 24 / 7 visibility
  • Tax-efficient growth/savings as a non-UK resident

Upon assessing the market place and by using the above criteria the field is dramatically reduced. As we are now also focusing on international solutions there are additional benefits such as :

  • Multi-currency, reducing the necessity to convert to GBP upon saving and be held to the fluctuating currency markets
  • Access to extensive fund ranges, all UK or European regulated
  • Multi-currency fund ranges allowing the client to not only hold cash in different currencies but also invest

Important to note, although you could invest in a Money Market Fund, due to interest rates being so low you will never cover the costs of the product or beat inflation. Therefore this is not a guaranteed deposit account but more like stocks and shares ISA, albeit with the requirement of a financial adviser. Therefore there is always the risk of the value of your investment going down as well as up.

Risk is the key element with any investment, the greater the risk the greater the potential gains but also losses. A less risky portfolio is likely to consist of debt or bonds such as Government and Corporate bonds which are far lower risk but also offer lower returns. Equities or stocks and shares such as Apple or Microsoft offer far greater opportunity for growth but will also fluctuate with market company bonds and are therefore riskier.

So where does this leave us?

We started by looking at UK savings account while living abroad. In conclusion, there is very little if any options available. Offshore accounts require minimum balances and even then are unlikely to cover inflation costs of 2%. A ‘Global Investment Account‘ (GIA) offers a solution, perhaps not for everyone but the opportunity to save your money, as and when you please for any period of time.

Harrison Brook specialise in ex-pat wealth management, where it be high-value portfolio management, just starting out with a savings plan for a house or long term retirement planning. We’re transparent, fee-based independent financial advisers who have been at the forefront of offshore impartial advice for many years. For more information please contact or check out our 5-star review rating on the independent site Feefo for customer testimonials.

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