Tax-free interest on overseas bank accounts? Don’t believe it

“Put your money in a bank account in Jersey or Guernsey – the interest is tax free.” This is the advice from the tax expert propping up the bar in your local pub.

I hate to say that I have even seen the same statement in a mailshot from a local bank.

If you are UK citizen resident in the UK, this advice is wrong.

What they meant to say was that the interest is sometimes paid without deducting tax at source on accounts held in the Channel Islands.

UK residents still need to declare details of any interest received from offshore accounts on their tax returns. The interest is taxable.

Please do not forget to declare it because otherwise, using the words of David Hartnett of the Revenue, “You could go to jail”.