You've probably had an NRE or NRO account for years. Maybe your parents helped set it up before you moved to London. It worked fine.
Now you're hearing about GIFT City everywhere. Friends in your WhatsApp groups are moving money there. But is this actually better, or just another financial fad?
As someone who's helped hundreds of UK-based NRIs navigate this decision, I'll break down what matters-especially after the April 2025 non-dom changes.
The Basics: What Are We Comparing?
NRE Accounts (Non-Resident External): For parking foreign earnings in India. Funds convert to INR. Interest tax-free in India. Fully repatriable.
NRO Accounts (Non-Resident Ordinary): For India-sourced income like rent or dividends. Funds in INR. Interest taxed at 30% TDS. Repatriation limited to $1 million per year.
GIFT City FDs: Foreign currency deposits at bank branches in India's International Financial Services Centre. Funds stay in USD/GBP. Tax-free in India. Fully repatriable.
For technical details, see our guide on NRE, NRO, and FCNR differences.
The UK Tax Reality After April 2025
From 6 April 2025, the remittance basis ended. You now report all foreign income on your Self Assessment-regardless of whether you bring it to the UK.
Your NRE interest, previously potentially sheltered, is now taxable in the UK at your marginal rate.
👉 Tip: UK residents must inform Indian banks of their UK residency status to ensure TDS is restricted to 15% under DTAA, not 30%.
The tax sparing wrinkle: Under the UK-India Double Tax Agreement, NRE and FCNR interest can receive a notional 15% tax credit-even though no Indian tax was paid.
The catch? This relief only applies for ten years from account opening. If you've had your NRE account since 2012, that window may be closed.
For complete DTAA guidance, including the tax sparing mechanism, check our detailed guide.
Currency: The Hidden Factor
This is where most NRIs make expensive mistakes.
NRE deposits: Your GBP converts to INR at deposit. Returns are in INR. When you want money back, you convert again.
Over the past decade, INR has depreciated 3-5% annually against major currencies. That "7% return" might actually be 3-4% after currency erosion.
GIFT City deposits: Money stays in USD or GBP. No conversion in, no conversion out.
For UK NRIs earning in GBP, GIFT City removes INR depreciation risk entirely.
Track patterns on our Rupee vs Dollar tracker before large deposits.
Repatriation: Getting Your Money Back
NRE accounts: Fully repatriable. No limits. But you're converting INR back to GBP.
NRO accounts: Capped at $1 million per financial year. Requires documentation showing source of funds.
GIFT City: Fully repatriable. No caps. Funds stay in foreign currency throughout.
If you're building a corpus for UK use, GIFT City's seamless repatriation is a genuine advantage. Learn more about repatriating funds from India.
Flexibility: Tenure and Access
Traditional NRE/NRO FDs: Minimum tenure of 1 year. Early withdrawal typically forfeits all interest.
GIFT City FDs: Tenures start as low as 7 days. Premature withdrawal doesn't forfeit entire interest.
👉 Tip: For short-term parking (3-6 months), GIFT City is your only real option among Indian deposit products.
Tax Comparison: India vs UK
Deposit Type | Tax in India | Tax in UK |
|---|---|---|
NRE FD | Tax-free | Taxable (with 15% credit for first 10 years) |
NRO FD | 30% TDS | Taxable (with credit for Indian tax paid) |
GIFT City FD | Tax-free | Taxable at marginal rate |
No deposit is completely tax-free for UK residents.
GIFT City advantage: Zero TDS means no reclaiming, no Form 15CA/15CB complications. Your UK Self Assessment is straightforward.
NRO disadvantage: 30% TDS creates refund situations in both countries. More compliance, more paperwork.
Our FD taxation guide covers the complete picture.
Deposit Insurance
NRE/NRO deposits: Covered by DICGC up to ₹5 lakh (approximately £4,800).
GIFT City deposits: Not covered by DICGC. Safety comes from IFSCA regulation and bank stability.
If insurance matters, split investments: keep some in NRE fixed deposits with coverage, some in GIFT City for efficiency.
When NRE/NRO Still Makes Sense
NRO is essential if: You receive rental income, dividends, or pension from India. This income must go to NRO.
NRE works well if: You're confident in INR appreciation, want loan facilities, or prefer existing bank relationships.
Understanding NRI account types helps structure accounts correctly.
When GIFT City Wins for UK NRIs
GIFT City is better if: You want currency protection, you're building a corpus for UK use, you value simple tax compliance, you might need funds within a year, or you're planning return to India.
Particularly strong for: UK NRIs who've exhausted their 10-year tax sparing window on NRE accounts.
Making Your Decision
Use our NRI FD comparison tool to see current rates across all deposit types.
Check your residential status to confirm NRI qualification.
Run through our Compliance Compass to ensure you're meeting both Indian and UK requirements.
The Bottom Line
For most UK NRIs post-April 2025, GIFT City offers a cleaner package: no currency risk, no TDS complications, flexible tenures, straightforward UK tax reporting.
The smart approach? Use NRO for India-sourced income (mandatory). Consider GIFT City for new foreign currency investments. Keep existing NRE accounts if tax sparing is still active.
Next Steps:
Join our WhatsApp community to discuss your situation with other UK NRIs.
Download the Belong app to compare live rates and explore GIFT City options.
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