In the City of London (ie. nr. Liverpool Street) - 'offshore' bank accounts? tax free?

No. They would want to have proof of address.

Is it worth it for the extra interest on a couple of grand ?

A couple of hundred grand maybe.....

NS&I's Direct ISA pays 5.3% tax free (I think)

Whilst tax may not be deducted from such an account, you are still liable for UK income tax on it if you are a resident.

Only if it is remitted to the UK.

No, you have to be non-domiciled in the UK for that to work. If you're UK-domiciled as well as UK-resident, you're liable for UK income tax whether the income is remitted or not.

In message , Peter Saxton writes

Even with that, they wouldnt do it.

In message , snipped-for-privacy@my-deja.com writes

If the offshore bank is in the EU or IOM, or CI then tax will be deducted anyway.

In message , Peter Saxton writes

Not if you are resident and domiciled in UK.

Yes, you are right! I'm in the middle of organising offshore companies for two UK residents but non-domiciles.

Regarding Miss L Toes' comment about it not being worth it, won't the bank charges be greater than any tax savings on 2,000 capital if it is not declared?

In message , Peter Saxton writes

Not necessarily, you can open plain interest bearing accounts at many IOM & CI banks without any charges at all.

But the interest earned will be declared to the Inland Revenue due to a European parliament law/ruling. Punitive rates of tax will be levied on offshore accounts if interest is not declared.

But these will have tax deducted at source. This would defeat any tax avoiders!

In message , Eric Jones writes

(My reply applies only to the crown dependencies of IOM and CI.)

No, only if the depositor elects. the "EU Savings Directive" requires the deposit taker to enquire of the depositor if they wish the gross interest paid to be advised to their country of residence's Revenue. If the depositor elects not to then a 'retention' tax (in effect a witholding tax) is deducted. for the first three years at 15%, rising to

Not so in most cases. If the Revenue of the depositor country of residence learns that interest is being earned in an offshore 'haven' then they will only charge the marginal tax required over and above the retention tax deducted to bring the total tax to that which would have been paid had it been declared. Note that the default situation is for retention tax to be applied NOT exchange of information and therefore the Revenue will not learn of it via the deposit taker or the offshore regime.

The exception is those individuals who would have paid tax on the interest at a rate lower than the retention tax applied.

In message , Peter Saxton writes

Yes, but potentially at a lower rate, i.e. 15%, albeit rising to 20 and then 35%

It could enable a small deferment of tax.

For larger amounts there is a neat workaround though with a cheap offshore life bond.

I agree with this - you'd be taxed anyway.

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I think the OP still thinks it's the 1970s, and you can secretly squirrel your cash away offshore.

In fact, the bank will tell the inland revenue about your account. If you don't declare it, and skip the tax on the interest, then they will catch you eventually and fine you. In any case, it is likely that you would end up paying a withholding tax on the account anyway, negating any (illegal) saving of tax.

However, if you are depositing a lot of money, it can be beneficial as you would pay the tax in arrears, as opposed to at source if your account was onshore. That can add up.

For info, even in Switzerland, where you could properly hide your money with no chance of it being found, you would:

a) have to pay a withholding tax b) have to prove the source of the money was legitimate.

I think what you are looking for does not really exist, maybe in Central America or somewhere where your money is basically not safe.

Now, if was the 1970s again ... :-)

It is the other way around I think. The Inland Revenue has recently demanded account details including transactions, interest, balances from all the UK banks for customers they have in their offshore subsidiaries who have a UK address. Lloyds-TSB, to name one bank, is complying with this demand.