Bank Account Coverage - Does the UK have their version of FDIC coverage?

Breaking news! Now also German banks! Click here. The German government had to act, given that Hypo Real Estate, Germany's second biggest commercial property lender, was in great danger of collapsing.

Apparantly not http://news.bbc.co.uk/1/hi/business/7654383.stm

Vicky

Apparantly not http://news.bbc.co.uk/1/hi/business/7654383.stm

And Iceland has folded up shop and left the building...

Again, my vote is for not panicing and just hold on.  It is a joke to think that the world governments could 100% guarantee anything...

I wanted to tag into this conversation because we're a bit worried about the security of our checking account. My husband's company requires us to use Natwest (offshore Jersey). They just issued new terms and conditions which do not include an FDIC type guarantee of our money. I was stunned, it never occurred to me that our money wasn't "safe." Does anyone know if money in these offshore banks are safe? We tried to transfer money back to our US bank but could not.
Any information would be most appreciated.

I think there are two points to make. Firstly your husband's employer cannot insist that you keep lots of money in that offshore NatWest account. They might be able to insist that he has that account, and that his pay goes into it, but whatever happens to the money thereafter is none of their concern.

But, knowing something of tax arrangements for expats in the UK, if indeed that is what your husband is, your husband should get tax advice before remitting any of the money into the UK. That could be very expensive in terms of tax.

Secondly, NatWest is owned by Royal Bank of Scotland. It is a big secure bank. It has guaranteed all deposits made into its CI subsidiary. RBS has benefitted from the UK Government announcement today. Or put it another way, if RBS is in real trouble the whole financial system would be in collapse.

But nothing to stop money being moved around, in a tax-effective way. Maybe put money into an Irish bank?

Thank John L. You are correct, the account is used for payroll. We only put money into the account when we need it locally, for vacations, Christmas etc.... In fact we did just that last week. Banking was never a big deal, we just used the required bank since it was available. Yes, my husband is an expat and does receive tax advice from his company, so hopefully all those issues are copacetic. Although there are "urban rumours" of horror stories upon repatriation 

We are going to "regroup" for awhile. All this financial turmoil is unsettling; we are much older than most expats and retirement is/was in site. An expat assignment in the UK has been a boon to us, an "unexpected pleasure" that we will miss when we leave.

I did some internet searching and found the answer for offshore Jersey banking here at this site:

http://www.jerseyfsc.org/banking_business/faq.asp
Q: Does Jersey have a depositor-protection scheme?

There is presently no depositor-protection scheme in Jersey but the introduction of such a scheme is being considered./quote]

I'm a bit concerned about why they put the payroll in an offshore account.  Is your husband on a work permit?  Are the employers paying full employers NI, and is he paying full NI and income tax?


Vicky 

Offshore banking is standard practice Vicky because those who are R/NOR can claim to pay tax only on incme related to UK workdays.

Thankfully this relief still works after 6 April 2008 - and indeed modified payrolls could only work if employers insisted on depositing pay offshore.

I think we have had this discussion before...

Those on work permits must pay the equivalent of full UK NI and Income Tax.  If someone is working full time on a work permit in the UK they cannot utilise the same tax breaks that others can.  They must pay the PAYE equivalent.  This is part of the rules relating to work permits (not taxation law).

Vicky

Hi Vicky, We are here on a work permit. I'm sure the company is paying the taxes; don't want to name his company, but they are in the news all the time  We have to provide a quarterly "accounting" of all money in the account, both payroll and money we bring it to cover additional expenses.
I was able to find out that our money in the offshore account is not guaranteed, so we are going to change banks regardless of what the company wants.

Good idea.

You may want to just check your husband's pay slip, and ensure that the full deductions are being made.  Even big companies make mistakes.


Vicky