Billywiz1307

My son is British and living near Vancouver with his Canadian fiancé. He is currently working on a two year visa and is sponsored by a Canadian company. He is also applying for Residency. He and his girl are wanting to buy a home and I want to gift them £10,000 to help with the deposit.
My question is, what's the best way to achieve this legally and incur no penalties.

Dave

SchnookoLoly

When you say "incur no penalties", you'll struggle to find somewhere that will do it for no fees.

I don't know about the legal/tax side of gifting money, I think it's fine but you might want to look into that.

In terms of services, we used Oanda. They're a bit pricier than some of the other services, but transfers up to £50k are protected the whole way through the transfer. I think the fee is £40 for a transfer, and they do have good conversion rates. The protection was the big thing for me and my husband. Lots of threads about this, though, you'll find tons of recommendations for companies to use to transfer money.

Billywiz1307

Thanks for your quick reply.
OK, let me ask this, what if I just rolled up at Vancouver airport with £10,000 cash on me. I know you have to declare above 10,000 dollars so I declare my £10K. I later give the money to my son and his girl. Is that illegal?

Aviator

You can send them a cheque on a UK bank and they can deposit it in a CDN account here. Anything over $10000 will be reported by the institution, but usually causes no problems. For £10k, this is what I would do.

Alternatively they (or you) can set up an account with an FX broker, give them the 10k they send the CDN to the designated bank account here.

Billywiz1307

Can you just clarify, why is there a need for an intermediary i.e.an FX broker?

MarkG

Generally, you pay less fees that way, and fees on 10k pounds could be hundreds of dollars.

BTW, I wired $100k to my girlriend here as a downpayment on a house before I moved, and only the mortgage folks ever asked about it. I think they wanted to be sure it wasn't a loan, so she'd qualify under the lending limits.

Aviator

Sometimes you can get a slightly better FX than the banks cheque rate. On small amounts this can be negligible and not with the hassle.

Depositing a foreign cheque, when it suits and the rate is acceptable, is very easy.

99problems

Basically if you use halfinancial or Westcorp or HiFx or any one of a number of these UK brokers they offer virtually the actual exchange rate as opposed to the banks whcih give you a crap rate. Never use a bank to change more than $1000. They are FSA refulated etc and efficient. You open a dealing account with them, pay UK pounds in and have them convert to CAD$ and give them your son's Canadian destination bank account details.

Billywiz1307

All has become clear, thanks for that people, great replies.
Dave

Aviator

Sorry, but this is inaccurate. On many an occasion I have got the same rate from my bank that an FX broker has offered, or within a few pips. Personally under £10k I use a bank and deposit a cheque.

FX rates vary according to the transaction type. Some brokers build their fees into the spread and some charge it as an extra, however you slice it you pay a fee.

Novocastrian

There is one more wrinkle, which is likely not an issue, but you should know that you can only gift 3000 pounds a year without it influencing UK Inheritance Taxes for your estate if you kick the bucket within 7 years.

Shirtback

I agree with Aviator. For amounts around 10k, bank to bank transfer, or cheque drawn on a UK bank, has always been the best way/rate, in my experience.

Be aware that if you write a cheque, clearing time can be 30 working days from deposit.

Novo's advice is good too.

SB

MountainHiker

Last time I just used a SWIFT transfer I think my UK bank charged me £25 and my Canadian bank charged me $7.50 to receive it. The exchange rate was very similar to what brokers were offering at the time too.

dgagitw

There's no law that I'm aware of that would prevent you from giving them the money...

As to how to do it at minimal cost, that's somewhat harder. Your options are:

- use your bank and wire it to them. The fees will be small (~30GBP I think) but you'll likely get totally screwed on the exchange rate.
- use an FX broker. Slightly lower fees and a much better exchange rate but the outside chance of losing the lot if they go bust. I once checked with Caxton FX and they do not segregate client funds and they aren't covered by the FSCS.
- get your son to set up an account with a Canadian based FX trading company (e.g. Oanda), have him open up CAD and GBP accounts under that. You wire the money direct to his GBP account. He trades into CAD. It's a lot of hassle, but the exchange rate will be very close to spot and you'll be dealing with a regulated firm.

Regardless of which approach you take, compare the FX rate you're offered to those shown on xe.com and then haggle.

Eddmac

Granted I haven't transferred money to canada yet, but when I returned to the UK from Ireland, I used Moneycorp to transfer and exchange euros to pounds. The difference in the bank rates and Moneycorp totalled almost £10000. ( on a £180k transfer )
Best thing to do is get a quote from your bank of choice and compare to several brokers, I would suggest Moneycorp and Caxton fx as I have used both. 10k should be large enough to make a difference.