rugbymummy

I am new to this so please forgive me if what I ask about has been answered before or if it seems like a stupid question - I have trawled the site and there are various replies but all seem quite old. My husband is moving to the UAE in about 2 months (and will send all that HMRC require to ensure that they know he is resident overseas) but I will for the time being remain in the UK as the children are part way through their GCSE/A level's. We have been advised by HSBC to set up an offshore account with them (global banking) prior to him leaving the UK with a bank account and a AED deposit account so that my husband can then do an online transfer to put funds into our First Direct account for mortgage, living expenses etc for me and the children. As we have a quite a hefty mortgage and bills to pay it is important that financial transactions are as seamless as posssible - we have UK savings in my name but they will only last a short amount of time if I have to start paying the mortgage etc from them. We have been told that he can't open a local account for his day to day expenses in the UAE until he is actually there and we are not sure (need to ask the question obviously) if his employer will pay his salary into an offshore account or if it will have to go into a local account and then be forwarded offshore from there. Is what we have been told by HSBC good advice? We appreciate that it may cost in account/transfer/exchange fees until there is a larger balance in the HSBC Advance account, but would it be better to follow this route initially to ensure that UK committments are met and then look at other options in a few months time once he is settled into his job out there?

Norm_uk

Glad to hear you have told the taxman - a lot of people don't do that.

It sounds like the priority is to make sure there are no interruptions to financial obligations back home if I have read you correctly.

I feel it's easier to just have a UAE account (which his employer will have no problem paying into) and he sends home everything he doesn't need rather than setting up an offshore account and paying the higher fees and charges most offshore accounts entail. It might make sense later if the whole family becomes expatriates and you're not sure if you are going back in the near future though.

You should also check his life insurance/income protection/critical illness will cover him working overseas as a non-resident. Some UK policies don't cover expatriates. Get that in writing from the insurer if they say they will.

I can probably recommend a transfer company that will save you on the currency exchange and maybe the actual transfer fees as well that is UK FSA regulated - they can also fix exchange rates for several years so you're not worrying about rates going up and down all the time - feel free to PM me about that.

N.

Jackwow

Don't use the bank for transferring funds, use an exchange house such as Al Rostamani because the difference in exchange rate will be significant.

Bob

xe.com get recommended a lot on BE to transfer money for decent rates, or for arranged fixed contract rates.

The Dean

Hmmmm..............

Norm - please PM me about the company that can fix rates for 'several years' - I am curious.

Jackwow - in my experience, the difference between the currency houses and the banks is minimal, if any at all, these days - can you quote some comparisons or examples?

Rugbymummy - I think your husband should ask his employer about this. Some employers say 'we cannot do it this way', 'we cannot pay into such-and-such an account', etc. Good luck.

weasel decentral

Every bank I have tried is usually 1 to 1.5% higher than the market rate. For example buying euro with dollars today is $1.24 on the market but the best you will get from the bank is $1.255 or $1.26.
I am using a website called currency fair, you will get the market rate or better and the transfer fee is €3.

Meow

If your husband is moving to the UAE, but you and your children are staying behind, you will need to be aware of HMRC rules regarding residency and particularly once they change in April next year. Having a home and family in the UK are counted as 'connecting factors' and will limit the number of days he can spend in the UK during a tax year.

rugbymummy

Thank you for all the quick responses and useful information. Can I just be clear; So long as my husband is out of the UK for the remainder of this and another full UK tax year (other than a few days back which will be well under the HMRC annual limit), any money he sends back to our joint none interest paying UK current account will have no tax implications as the earner is resident overseas? Any savings would then go into a savings account in my name only and I do not pay tax at the moment anyway, although the priority is to clear the mortgage a.s.a.p before building up huge savings.

Meow

Not that simple. If he leaves now, he would have spent more than 91 days in the Uk in the year and could be considered resident and liable for UK income tax on overseas earnings depending on how many tax years he remains non-resident. There is however something called 'split year treatment' which is a concession that HMRC generally apples when someone leaves the UK mid -year to work full-time abroad and becomes non-resident (or returns after such a period) It means that you are entitled to full personal allowances for that part of your income which arises in the UK before your departure, while income arising abroad is not liable for UK tax. Note however, that this is a concession and not a right.

Chances are he won't be liable for UK tax on this year's earnings if all other requirements are met. From what you have said, I would imagine that in the 2013/14 tax year your husband is likely to be restricted to 45 days in the UK to retain non-resident status.

rugbymummy

Thank you very helpful information.

The Dean

I will be astonished if you can get 1.24 as a retail client of an exchange house, either via a branch or online. I have some reasonably up-to-date market research on this - give me a while and I'll try to post it.

weasel decentral

Well prepare to be astonished.
Also in Cairo here when I use a exchange shop to change dollars to Egypt pounds, the spread on the sell and buy rates is tiny. I get as near as damn it the market rate walking in off the street.

Johnnyboy11

Correct, plus there are other UK tax advantages available:

(i) If your hubby has paid 40% tax on any earnings this year then consider opening a SIPP and paying in all earnings above basic 20% tax rate. You'll get a 40% rebate from HMRC (20% automatic and another 20% by asking or filling a tax return).

(ii) Use both your ISA allowances, about 12k each (half cash, half shares).

(iii) For the following 4 years, get your hubby to add £2,880 to his SIPP and HMRC will refund 20% (£720) automatically.

(iv) For you, open a SIPP and add £2,880 each year and benefit from the same rebate, in perpetuity.

Then use your SIPP funds to have a punt on the stock market. I pick shares in the thieving UK Monopoly/ Utility Companies such as SSE, Centrica, United Utilities and the like to offset their ridiculous bills. Check the Hargreaves Lansdown site for SIPP details.

[J]

Meow

A SIPP is not required. A standard Stakeholder style pension is fine and cheaper for small contributions.

And take proper advice on investing.

ipods

Firstly I used HSBC and found them to be ok. Where in UAE is there a branch where you are.
You will probably paid local currency so set up off shore account HSBC jersey.
Be carefull coz to benifit from tax free status you ahve to be out the uk for a complete tax year that will be April 2012. ie if going now need to be in uk not more than 90 days in a tax year.