Banking, Money and Taxes in the United Kingdom


Penny Rolling

Expats moving to the United Kingdom will find the country has advanced banking systems which are fairly straightforward to use. 

 
Opening a bank account will be a priority for expats moving to the United Kingdom. Although this is a fairly simple process, foreigners will require proof of income and employment, as well as evidence of a local address. 
 
Unlike in other countries, most banks in the UK do not charge customers to use their services. Instead, some banks even offer incentives to encourage people to choose them over their competitors. 

Online banking is a standard feature offered by all banks in the United Kingdom and makes managing everyday finances really simple. 
 

Money in the United Kingdom

 
The United Kingdom is one of the few EU member states which has not joined the single currency, or Euro (EUR). The official currency in the United Kingdom is the British Pound (£). One pound (GBP) is divided into 100 pence. 
 
Notes: £5, £10, £20 and £50
Coins: £2 and £1, then 50, 20, 10, 5, 2 and 1 pence.
 
Most debit and credit cards are accepted in the UK and ATMs can be found nearly everywhere, and generally offer the best exchange rates (transaction charges do exist for international card use, and can quickly add up). 
 
Banks with a more prominent international presence such as HSBC and Santander, are an excellent option for expats who have banked with these institutions in their home country or for those that travel regularly. 
 
Currency can be exchanged at most banks, bureaux de change and even at post offices – which actually offer some of the best rates.  
 

Banking in the United Kingdom 

 
Opening a bank account in the UK can be a frustrating process for expats, and with over 20 commercial possibilities, choosing the best institution can often be the most complicated part.
 
In order to open a bank account in the UK, most banks require proof of income and employment, evidence of a local address, and a passport. Some banks allow expats to open a bank account before they have arrived in the UK. Although this does make transferring money easy, it is more expensive and the bank would require you to set up an account with them at a branch in your home country as well as transfer a hefty initial deposit. Some travel agents sell ‘bank account set-up’ packages, which definitely help when setting up a bank account upon arrival in the UK.
 
It can be helpful to have a letter of introduction from your home bank, specifically testifying to your credit worthiness and financial track record. A series of recent bank account statements will also be helpful. Banks vary in the strictness of their requirements so shop around.
 
The major banks are HSBC, Royal Bank of Scotland, Lloyds TSB, Barclays and NatWest. Banks do not charge for most minor transactions, including issuing cheques and withdrawing money from ATMs. Once you have set up your bank account it is important to register and receive your National Insurance numbers.
 

Taxes in the United Kingdom


Expats who have lived in the UK for over 183 days across the tax year must pay tax on their UK or overseas-generated income. Tax rates vary from 20 percent for an income of up to GBP 32,010 annual gross income, 40 percent for amounts over GBP 32,011 and 45 percent for amounts over GBP 150,000. The main personal allowance is GBP 9,440, under which you pay no tax. The tax year ends on 5 April.
 
Expats must complete form A86, downloadable from www.hmrc.gov.uk, and submit it to their local tax office, for the purposes of determining their correct tax status. Until this is done you will be assigned a temporary insurance number to establish your tax level. This will mean you will pay a higher rate of tax (“Emergency tax”) but this can be refunded once you acquire full tax status.

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