Offshore savings

Rachel Thrussell, Head of Savings at Moneyfacts.co.uk, comments: "Offshore savings have long been seen as a tax haven for the rich, but with some accounts accepting a minimum deposit of just £1,000 this is no longer the case. The rates available on offshore accounts are just as competitive as their onshore counterparts.

“Many of the mainland UK institutions now have offshore subsidiaries, meaning that investing offshore has become easily accessible to the mainstream public.

"The European Union Savings Directive, which came into effect in July 2005, means that details of any income received from offshore accounts is passed on to HMRC. However, it has always been possible to defer the payment of interest, which may be of benefit to some.

"Savers also need to be aware that in the unlikely event something goes wrong with the bank that they are investing in, they will be covered by the relevant compensation scheme. The amount of cover varies depending on where the company is based, but none are as comprehensive as the Financial Services Compensation Scheme that covers the UK. In fact, there is no depositor protection scheme in either Jersey or Guernsey."