How do I get security for my savings?

Q My wife and I want to save some of our earnings on a regular basis while we are living in the United Arab Emirates. We are not interested in shares or Isas as we were stung in 2000 when my £10,000 in Peps/Isas (when the FTSE was over 6000) turned into £5,000 three years later.

We simply want to save over the next three to four years with no risk to our savings and receive an ok amount of interest, say 5% net. Is that asking too much?

DD

A An offshore deposit account, based in one of the tax havens like the Channel Islands, seems the right answer to meet your needs. Providing you choose a bank or building society, with a name to protect, your money should be absolutely safe.

Whether you can get 5% net is another matter, especially with interest rates for sterling likely to go down in the months ahead. The rate of interest will also depend on how much you have in the account. Most of the accounts require a minimum of £1,000 but normally £10,000 is required to get the top rate of interest.

Once you have set up the account, and satisfied the money laundering regulations, there should be no problem in making regular contributions. Since July 1, offshore accounts either impose a withholding tax, starting at 15% and rising over the next few years to 30%, or deduct no tax at all providing you agree to provide details of your holding to the tax authorities.

The new regulations were introduced to catch investors who avoided paying tax by not declaring their holdings offshore. Since you are currently non-resident in the UK and are not liable to pay income tax on the interest, that should be no problem and most convenient.

There is a very wide range of offshore accounts available. You should be able to shop around on the internet to find the best account to meet your needs. Just be careful to stick with a well-known name.