# Bank interest may cost you more in tax than you expect

> High earners with substantial savings face steep tax bills on interest, but investment restructuring and offshore endowments can help.
- Title: Bank interest may cost you more in tax than you expect
- Summary: High earners with substantial savings face steep tax bills on interest, but investment restructuring and offshore endowments can help. South African savers…
- Keywords: bank interest, tax planning, south africa, sars, offshore accounts, estate planning, capital gains, kenny meiring, news, politics, Bank, interest
- Source: Daily Maverick — https://dailymaverick.co.za/article/2026-10-29-interest-on-your-money-in-the-bank-may-deliver-less-than-expected-after-tax
- Author: Kenny Meiring
- Published: 2026-10-29T19:24:57+00:00
- Read time: 2 min
- Topics: bank interest, tax planning, south africa, sars, offshore accounts, estate planning, capital gains, kenny meiring, news, politics
## The problem with bank savings
A reader told their tax adviser they owe the SA Revenue Service more than one hundred thousand rand this year because they hold too much money in local and offshore bank accounts.
## Interest gets taxed heavily
Once interest earned on South African bank accounts exceeds your annual tax-free allowance, the excess becomes taxable. For top earners, interest can be taxed at forty-five percent.
## Capital gains offer better returns
Capital gains are taxed at a maximum effective rate of eighteen percent, and you receive an annual capital gains exclusion of fifty thousand rand.Moving surplus cash into investments offering capital growth can reduce tax bills.
## Offshore interest has no exemption
If you are a South African tax resident, you pay tax on interest earned in offshore bank accounts even if the money stays overseas.
## Offshore money faces complications
When you die, foreign banks may require additional legal documents before releasing money to your estate. This could mean appointing overseas lawyers, paying extra fees and waiting months for release.
## Offshore endowments simplify inheritance
An offshore endowment policy is an investment offered through a life insurance company. You can nominate beneficiaries to receive the investment, avoiding complicated foreign legal procedures and potentially avoiding certain foreign estate taxes.
## Restructure your money strategically
Keep enough in South African bank accounts to cover emergencies and expected expenses over the next year or two. Move surplus cash into investments offering better long-term growth and potential tax advantages.
## Good planning protects your legacy
By reducing unnecessary tax, keeping costs down and structuring investments correctly, you improve your financial position. Good planning means your children can benefit from your wealth without unnecessary costs, delays or complications.
## Key takeaway

South African savers paying top tax rates can lose 45 percent of bank interest to tax, but moving money into capital growth investments and offshore endowments can reduce bills and improve after-tax returns.