With the implementation of the EU Savings Directive in 2005 – many offshore banks including Jersey and the Isle of Man will start charging withholding tax on interest saved.
If you work in the UK but are not UK Domiciled – this withholding tax will be paid to the UK Inland Revenue. Will there be a method to reclaim this Withholding Tax in the case of the interest earned offshore not being remitted to the UK (and therefore not subject to tax)?
Secondly most offshore banks allow having the interest paid into a separate account so as not to contaminate your original invstment allowing you to have the capital returned to the UK if you want. At what point does the interest earned become capital?
My undertanding is that if the original investment source is closed in one tax year the interest can then be returned as capital the next tax year - is this correct or is there a better way?
Thanks.
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