Banking, Money and Taxes in the United Kingdom
- Purchase the complete Expat Arrivals United Kingdom Guide (PDF)
Opening a bank account will be a priority for those moving to the United Kingdom. Although this is a fairly simple process, expats will need proof of income and employment. In some cases, they will also need to provide evidence of a local address.
Online banking is a standard feature offered by all banks in the United Kingdom and makes managing everyday finances simple.
Money in the United Kingdom
The official currency in the United Kingdom is the British Pound (£). One pound (GBP) is divided into 100 pence.
- Notes: 5 GBP, 10 GBP, 20 GBP and 50 GBP
- Coins: 1 GBP and 2 GBP, and 1, 2, 5, 10, 20 and 50 pence
Banking in the United Kingdom
Opening a bank account in the UK can be a frustrating process for expats, and with so many options, 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 arrive in the UK.
It can be helpful to have a letter of introduction from a bank in an expat's home country testifying to their financial track record. A series of recent bank account statements is also useful. Banks vary in the strictness of their requirements, so shop around.
The major banks are HSBC, Royal Bank of Scotland, Lloyds Banking Group, Barclays and Santander UK.
ATMs and credit cards
ATMs are readily available in all major towns and cities in the UK and are operational 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 debit and credit cards for even the smallest 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- and overseas-generated income, subject to any double taxation agreements. The UK has a personal tax allowance of GBP 12,500 (2020/2021). Any earnings above this are taxed. The tax rate is 20 percent up to an annual salary of GBP 50,000, then 40 percent up to GBP 150,000, and 45 percent above this. Slightly different rates apply to Scotland.
In addition to income tax, employees are required to pay a National Insurance contribution of 12 percent if earning between GBP 792 to GBP 4,167 a month or 2 percent if earning more than GBP 4,167 a month.
Tax regulations can be complicated, and they often change. Expats are advised to consult a tax expert, preferably one who specialises in expat taxes, to find out the latest information.