Banking, Money and Taxes in the United Kingdom


Penny Rolling

Opening a bank account will be a priority for those 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 expats to set up an account with them at a branch in their 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 a bank in an expat's home country, specifically testifying to their 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 Bank, Barclays and NatWest. Banks do not charge for most minor transactions, including issuing cheques and withdrawing money from ATMs. Once expats have set up their bank account it is important to register and receive National Insurance (NI) numbers.

Banks in the United Kingdom at generally open from 9am to 5pm. However, telephone banking services operate over an extended period of time.

ATMs and credit cards

ATMs are readily available in all major towns and cities in the UK and are operation 24/7. Customers can use the ATM of any other UK bank without incurring any additional changes. However, expats using foreign-issued bank cards are likely to incur bank charges for each transaction at an ATM in the UK. 

More and more people in the UK avoid carrying large sums of cash and retailers accept major credit cards for even the most minor payment. 

 

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 31,865 annual gross income, 40 percent for amounts over GBP 31,865 and 45 percent for amounts over GBP 150,000 (allowances for Tax Year 2014/2015). The main personal allowance is GBP 10,000, under which a person pays no tax. The tax year ends on 5 April. (allowances for the Tax Year 2014/2015)
 
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 expats will be assigned a temporary insurance number to establish their tax level. This will mean they will pay a higher rate of tax (“Emergency tax”) but this can be refunded once they acquire full tax status.

* Tax regulations change regularly and expats are advised to consult a tax expert to find out the latest information.

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