UK non-dom: best offshore brokers and banks account

[mandarin88]

With IBUK where is the account located that you are you paying the money into? Does the funding of IBUK account require you to send money into a UK account? If so you have done a remittance.

USA I'm quite sure.

No, the money (USD account in USA) is sent by ACH account link to IB LLC (USA entity). Are you familiar with ACH? Automated clearing house - Wikipedia

Also reference: Tax: UK Persons and Entities: UK Residents IB Accounts | IB Knowledge Base

"For your reference, Interactive Brokers (UK) Limited acts as an arranger for Interactive Brokers LLC. Interactive Brokers LLC holds clients funds and assets."

The example you quoted is clear as no offshore funds at any point were sent to UK. This is how it works in private banking in UK for non-doms. A non-dom can have a local banker who manages their assets held offshore and payment for that service takes place offshore and assets being managed offshore have no UK situs. The local banker in that example is compensated offshore thus no remittance has taken place by the client either in paying for assets or the service.

Thanks! Yeah it does seem quite clear. Also, my TX will be in USD and till stay USD.

There's also the temporary exception, if the asset doesn't remain in UK less than something like 250 days I think it was, it also isn't a remittance. Cash just sitting there, transferred in, then transferred back out, even if it was into the UK, if it's less than this time then it's also not remitted AFAIK.

RDRM34210 - Residence, Domicile and Remittance Basis Manual - HMRC internal manual - GOV.UK

Remittance Basis: Exemptions: Exempt property - temporary importation rule

You should check the other guidance available on GOV.UK from HMRC as Brexit updates to those pages are being prioritised before manuals.

Property of any description that derives from foreign income or foreign chargeable gains that is brought to the UK is exempt property if it meets the temporary importation rule (ITA07/s809Z4(1)).

The temporary importation rule applies to such property which is brought to, or received or used in the UK so that Condition A of ITA07/s809L applies (refer to RDRM33120 Condition A - money and property) but it is in the UK for fewer than 275 ‘countable days’. If this rule is met, the bringing in of the property is not treated as a taxable remittance.

I have yet to execute on any of this - have been studying a lot. Now know far more about all this than I ever would have liked to

Thanks Martin! Your knowledge and patience is impressive. You sound like an interesting person!

 

[Martin Everson]

There's also the temporary exception, if the asset doesn't remain in UK less than something like 250 days I think it was, it also isn't a remittance. Cash just sitting there, transferred in, then transferred back out, even if it was into the UK, if it's less than this time then it's also not remitted AFAIK.

How do you plan on making use of that with IB? As a former UK non-dom myself I am interested to know.

No, the money (USD account in USA) is sent by ACH account link to IB LLC (USA entity). Are you familiar with ACH? Automated clearing house - Wikipedia

Yes I am. So I guess you have your USD in US or a bank/EMI able to do an ACH?

 

[mandarin88]

How do you plan on making use of that with IB? As a former UK non-dom myself I am interested to know.

Oh, the temp rule - I just realised that if I made I mistake transferring money into UK (say to a UK account held by IBUK), I can transfer it back out with in that time and it won't count as remittance. I think it applies to cash as a normal asset.

But I'm quite convinced now that sending USD to IB's US account isn't a remittance, so not as worried about making a mistake with IB, but could be relevant for future mistakes, as long as the money isn't spent, or the asset doesn't remain in the UK.

Yes I am. So I guess you have your USD in US or a bank/EMI able to do an ACH?

Yes, the USD is with a US bank account, and is linked via ACH.
I also have another sum with TransferWise in a US balance (are they considered an EMI?) - and I think transferring from TW to IB's US USD account (via "normal" wire transfer - not ACH (not supported)) would also not count as remittance. I emailed TW to check (a different currency) and at least their USD and their NZD balances are kept in local accounts (USA and NZ respectively).

A lot rides on this not being a remittance of course - much $$$ - so I'm also keen to get a couple of responses from some accountants, and even HMRC directly (but their remittance help department only seems to accept questions via snail mail - I thought I might try ring them again, but as it's tax season they're swamped).

How confident are you on this setup not being a remittance? I imagine it actually must be super common, but I've searched the internet a lot for this on IB specifically and there's a lot of people asking the question, but not anyone really with concrete answers. I found the exact question asked on this forum but it's a few hundred bucks to join (might be relative nothing in respect of how much I might save, but then it's probably just another opinion): WealthProtectionReport.co.uk Archives

 

[Martin Everson]

How confident are you on this setup not being a remittance?

Zero confidence. I would simply avoid IB UK period. Your dangling your nuts in the lions mouth while telling the lion he has no right to bite. Simply pick a broker outside the UK or IB entity outside the UK and keep it simple.

 

[imrjl]

This is a really interesting discussion, I currently have an ETF portfolio with IB but moving to the UK and becoming a non-dom so will need to change.
Contacted a few private banks in Switzerland, Lux and Channel Islands, as @Martin Everson suggested, and was quite shocked at the fee levels.

Are there any banks out there that offer trading accounts AND are able to segregate accounts (I mean send the dividends to a different account) AND do not charge exorbitant private banking fees?

Another question about the type of investment suitable for non-dom residents: is a global ETF like WLD or a European one like IMEU a bad idea because there is a small UK component in them?

 

[rowena]

@imrjl
The correct broker depends on the size of your investments but always expect min 0.1-0.2% custody fee. If you have 6 figures then check those options: Citi IBP, Saxo, SwissQuote, DBS Treasuries.

If you go with big Swiss banks like UBS(min $5M) or CS(min $1M) then the custody fee is starting from %0.70 per year.

 

[BlueMist]

Citi IPB UK is not cheap for custody, last time I checked it was 0.5%.

 

[imrjl]

Thanks! I would say that fees of 0.7%+ only make sense for amounts of 2M and above., otherwise you're just swapping tax savings for bank fees.

@rowena, Checked swissquote but they are unable to segregate dividends to a separate account- will check the others you suggested though, thanks!

 

[Silvio]

@imrjl
The correct broker depends on the size of your investments but always expect min 0.1-0.2% custody fee. If you have 6 figures then check those options: Citi IBP, Saxo, SwissQuote, DBS Treasuries.

If you go with big Swiss banks like UBS(min $5M) or CS(min $1M) then the custody fee is starting from %0.70 per year.

Goddamn 0.7% per year just for custody, amazing.

Here are the custody fees for a few other Swiss banks:
UBS: Custody fees: 0.35% (up to CHF 10,000,000) + 0.2% for securities abroad. Between CHF 10,000,000 and CHF 25,000,000: 0.3%. Above: 0.25%.
ZKB: Custody fees Switzerland: 0.3% per position per year, min. CHF 3 per month.
Abroad: 0.4% per position per year, min. CHF 4 per month.
Total custodian fees (all positions) min. CHF 50 per year.

I would add that OCBC Singapore can also be cheap if you are holding a few BIG positions since they charge S$24 per counter: Let us help you | OCBC Securities

 

[Martin Everson]

Are there any banks out there that offer trading accounts AND are able to segregate accounts (I mean send the dividends to a different account) AND do not charge exorbitant private banking fees?

Banks YES that understand clean capital, dirty capital and know how to do settlement booking into different accounts for a UK non-dom. They are all in Channel islands or Switzerland. However charge low fees NO.

Another question about the type of investment suitable for non-dom residents: is a global ETF like WLD or a European one like IMEU a bad idea because there is a small UK component in them?

You need to check every investment whether it has UK situs. Why not ask IB if you can use their Luxembourg entity to trade or do they force UK resident to use UK IB entity?

 

[rowena]

Goddamn 0.7% per year just for custody, amazing.

UBS: Custody fees: 0.35% (up to CHF 10,000,000) + 0.2% for securities abroad. Between CHF 10,000,000 and CHF 25,000,000: 0.3%. Above: 0.25%.

No actually, this pricing is only for Swiss residents. UBS custody pricing for non-resident customers is 0.55% + %0.20 = 0.75%

https://www.ubs.com/ch/en/fidleg/_jcr_content/mainpar/toplevelgrid_1260135309/col1/accordionbox_1997230905/linklist_1577858016/link_copy.0489796560.file/bGluay9wYXRoPS9jb250ZW50L2RhbS9hc3NldHMvcmMvcHJpdmF0ZS9wZW5zaW9uL2RvY3VtZW50cy9wcmljZXMtc2VydmljZXMtaW50bC1lbi5QREY=/prices-services-intl-en.PDF

Swiss banks(UBS & Credit Suisse) are very safe but extremely expensive. Credit Suisse a little bit cheaper than UBS.

 

[Silvio]

No actually, this pricing is only for Swiss residents. UBS custody pricing for non-resident customers is 0.55% + %0.20 = 0.75%

https://www.ubs.com/ch/en/fidleg/_jcr_content/mainpar/toplevelgrid_1260135309/col1/accordionbox_1997230905/linklist_1577858016/link_copy.0489796560.file/bGluay9wYXRoPS9jb250ZW50L2RhbS9hc3NldHMvcmMvcHJpdmF0ZS9wZW5zaW9uL2RvY3VtZW50cy9wcmljZXMtc2VydmljZXMtaW50bC1lbi5QREY=/prices-services-intl-en.PDF

Swiss banks(UBS & Credit Suisse) are very safe but extremely expensive. Credit Suisse a little bit cheaper than UBS.

You mean the %0.20 is for "Surcharge for foreign custody"? because it looks like it is for "The following surcharge is levied on the total value of assets held with clearing organizations outside Switzerland"

Anyway I agree it looks very expensive and I don't see how it will be worth it. I guess that's how they filter the small fish they don't want to deal with

 

[rowena]

@maxmmm
Nope, pricing is different for Non-Swiss resident customers. You can check the link I wrote above.

The "Surcharge for foreign custody" is a completely separate and extra cost and it applies to every asset domiciled outside Switzerland(like the USA, EU stocks/ETFs/funds). Basically, if you don't invest something inside Switzerland you need to pay an extra 0.20%. That's why the custody fee of UBS is 0.75%. Credit Suisse also has a similar pricing structure but a little bit cheaper.

 

[Martin Everson]

Just to be clear with the private bank pricing is negotiable for both CS and UBS on a case by case basis. Take it from customer of both for over 22 years .

 

[rowena]

Yeah, obviously any bank will negotiate with you, especially if you're segmented as a private banking customer but still Swiss banks are expensive. UBS is the most expensive bank in Switzerland also they're going to increase their minimum relationship balance from $2M to $5M. They didn't announce publicly yet but is coming later this year. It is a 250% increase and clearly showing that they're going focus on VHNWI or UHNWIs. On the other hand, CS more HNWI friendly and cheap compared to UBS.

 

[mandarin88]

Anyone have experience to share RE: uk-non-dom with Singapore DBS wealth management/ private bank? Been speaking with them, UBS and Credit Suisse. Upwards of 7 to low 8 figures USD. Credit Suisse was very proactive in the non-dom discussion. Been looking at wealth management options to start with, with an eye of peeling away after a few quarters once comfortable towards the likes of Saxo and Swissquote (and/ or DBS treasuries?).

 

[rowena]

DBS is a very safe and good bank also cheap. As far as I know, their online banking is also very nice. I talked with them last year and their min. relationship balance was $3.5M. I prefer CS instead of UBS but DBS also a very good option outside the EU especially if you want to manage your assets yourself.

 

[mandarin88]

DBS is a very safe and good bank also cheap. As far as I know, their online banking is also very nice. I talked with them last year and their min. relationship balance was $3.5M. I prefer CS instead of UBS but DBS also a very good option outside the EU especially if you want to manage your assets yourself.

Thanks very much! Quite a relief to get some impartial perspective - so hard to find real reviews on these things.

you’re not UK non-dom though from what I gather (Dubai based). I wonder if DBS is set up well to handle the segregation matters required by non-Dom’s. Just got off the phone with UBS again and they have me convinced now (I know, I know) that it’s near impossible / impractical to manage without specifically setup systems and software assist/handle the reporting for your accountants.

 

[rowena]

Yes, I'm a non-UK person and I'm from Dubai. DBS has a private banking branch here they're pretty good and I'm pretty sure they have good solutions for non-doms. If Swiss is a must for you I suggest you CS. They almost have the same safety as UBS but offer better pricing and digital banking.

If you asking about my banking/investment then go with DBS(because of safety and pricing) and invest in the passive index ETFs of Vanguard/iShares. You can find very good index ETFs hedged to GBP(I assume you are UK citizen). If you need some guidance about index ETFs send me a PM, I can share some links.

 

[mandarin88]

Tha

Yes, I'm a non-UK person and I'm from Dubai. DBS has a private banking branch here they're pretty good and I'm pretty sure they have good solutions for non-doms. If Swiss is a must for you I suggest you CS. They almost have the same safety as UBS but offer better pricing and digital banking.

If you asking about my banking/investment then go with DBS(because of safety and pricing) and invest in the passive index ETFs of Vanguard/iShares. You can find very good index ETFs hedged to GBP(I assume you are UK citizen). If you need some guidance about index ETFs send me a PM, I can share some links.

Thanks! When I say non-Dom’s, Sorry I’m referring to the uk tax resident non-domiclied reporting structures and optimisations. The European banks appear to have a lot of systems set up to deal with it.
DBS guy said they can handle but we didn’t get into specifics. Have emailed and asked..

interesting to hear about the direct trading with dbs. Def something I want to get into

I should sign up to the forum so I can PM you