$ -£ exchange rate

Old Jul 29th 2019, 5:34 pm
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Default $ -£ exchange rate

Any thoughts on the $ - £ exchange rate.

Tempted to cash in my IRA and take advantage of the current rates.
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Old Jul 29th 2019, 7:47 pm
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Default Re: $ -£ exchange rate

Don't you get taxed on early withdraw?

I was thinking about cashing out my 401k but I would probably end up losing 30-40% in taxes
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Old Jul 29th 2019, 9:55 pm
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Default Re: $ -£ exchange rate

If it goes to parity I have told my family that we will sell up and retire in the UK. I am not sure how likely that is.
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Old Jul 29th 2019, 10:41 pm
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Default Re: $ -£ exchange rate

It got this low in January 2017 right when we were buying our house so we transferred a load of money at that time. Having been extremely lucky once I’m hesitant to incur more taxes to get a rate that may actually go lower as Oct 31st gets nearer. My US pensions get paid monthly so they have been enjoying the recent low rates but those low rates have pushed me into the 40% UK tax band.

Decisions, decisions.....

Last edited by durham_lad; Jul 29th 2019 at 10:46 pm.
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Old Jul 30th 2019, 9:12 am
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Default Re: $ -£ exchange rate

Originally Posted by durham_lad View Post
It got this low in January 2017 right when we were buying our house so we transferred a load of money at that time. Having been extremely lucky once I’m hesitant to incur more taxes to get a rate that may actually go lower as Oct 31st gets nearer. My US pensions get paid monthly so they have been enjoying the recent low rates but those low rates have pushed me into the 40% UK tax band.

Decisions, decisions.....
Many would gladly swap you and have a pension of £50k a year.
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Old Jul 30th 2019, 12:59 pm
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Default Re: $ -£ exchange rate

And the pound keeps falling. I wonder how many expats will see this as a good time to move back financially. I do fear how the country will fair after this is all over.
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Old Jul 30th 2019, 2:10 pm
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Default Re: $ -£ exchange rate

Originally Posted by mrken30 View Post
And the pound keeps falling. I wonder how many expats will see this as a good time to move back financially. I do fear how the country will fair after this is all over.
While we were still living in Australia we 'bought' an off-plan* apartment in 2013, it was going to be our home when we moved to the UK at the end of 2015. We made various 'progress payments' over the next couple of years, which totalled £113,000. It still hadn't been competed when we moved over so we had to buy another property to live in.

The developer went into administration early 2018 and shortly after that we moved back to Oz. Early indications were that we wouldn't see a penny of our money, but we've managed to claw £45,000 back. That was deposited in our UK bank account today, where it will have to sit doing absolutely nothing for us for the foreseeable future. We can't invest it in the UK because we're no longer resident. I don't feel able to take the hit of transferring it back to AUD, we've bloody well lost enough. So there it sits.

* I was an idiot to fall into the off-plan trap. I thought I was buying an apartment, but of course all I was doing was being a speculative investor. Never, ever participate in a fractional sales/buyer funded off-plan property purchase!
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Old Jul 30th 2019, 3:23 pm
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Default Re: $ -£ exchange rate

Originally Posted by cyrian View Post
Many would gladly swap you and have a pension of £50k a year.
Absolutely. While I am opposed to a no-deal Brexit I have certainly benefited by living here and having my US pension boosted by 33% with the fall of the £ from 1.6 to 1.25. My pension is fixed (no inflation adjustment) so having any "increase" once I started receiving it 9 years ago was never expected, nor was being in the 40% tax band.
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Old Jul 30th 2019, 4:43 pm
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Default Re: $ -£ exchange rate

Originally Posted by durham_lad View Post
Absolutely. While I am opposed to a no-deal Brexit I have certainly benefited by living here and having my US pension boosted by 33% with the fall of the £ from 1.6 to 1.25. My pension is fixed (no inflation adjustment) so having any "increase" once I started receiving it 9 years ago was never expected, nor was being in the 40% tax band.
I'm in the same boat. I retired in mid 2015 and the bulk of my pensions is sourced in Canadian $ and euros. Since then the pound has fallen 27% against C$ and 30% against the euro. All the pensions are inflation proofed so I'm now in the 40% zone for 2018 (just). Humbug!
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Old Aug 11th 2019, 1:09 pm
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Default Re: $ -£ exchange rate

Thanks for the replies. The current volatility in the markets is a concern. My own gut feeling is it would be better to cash out the IRA and take advantage of the exchange rate sooner rather than later. Either way it's a gamble.
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Old Aug 19th 2019, 9:19 pm
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Default Re: $ -£ exchange rate

US pension and SS will go a long way as $/£ edges closer to parity. It is tempting for expats in US to return for this reason. But then you're left with the Brexit aftermath economic and political mess, especially with no deal likely.

Last edited by Richard8655; Aug 19th 2019 at 9:46 pm.
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Old Aug 24th 2019, 6:31 am
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Default Re: $ -£ exchange rate

Originally Posted by durham_lad View Post
Absolutely. While I am opposed to a no-deal Brexit I have certainly benefited by living here and having my US pension boosted by 33% with the fall of the £ from 1.6 to 1.25. My pension is fixed (no inflation adjustment) so having any "increase" once I started receiving it 9 years ago was never expected, nor was being in the 40% tax band.
So do you pay US tax first, and then an additional 40% tax On the transferred amount?
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Old Aug 24th 2019, 6:40 am
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Default Re: $ -£ exchange rate

Originally Posted by durham_lad View Post
Absolutely. While I am opposed to a no-deal Brexit I have certainly benefited by living here and having my US pension boosted by 33% with the fall of the £ from 1.6 to 1.25. My pension is fixed (no inflation adjustment) so having any "increase" once I started receiving it 9 years ago was never expected, nor was being in the 40% tax band.
So do you pay US tax first, and then an additional 40% tax On the transferred amount?
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Old Aug 24th 2019, 12:13 pm
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Default Re: $ -£ exchange rate

Originally Posted by Albert_dock View Post


So do you pay US tax first, and then an additional 40% tax On the transferred amount?
The whole amount is taxed by both the IRS and HMRC. When I file my US taxes the pensions are marked as “Resourced by Treaty” so they are treated as foreign pensions on form 1116 and I claim a foreign tax credit for the taxes paid to HMRC. This reduces my US taxes to zero.
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Old Aug 24th 2019, 1:22 pm
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Default Re: $ -£ exchange rate

Originally Posted by durham_lad View Post


The whole amount is taxed by both the IRS and HMRC. When I file my US taxes the pensions are marked as “Resourced by Treaty” so they are treated as foreign pensions on form 1116 and I claim a foreign tax credit for the taxes paid to HMRC. This reduces my US taxes to zero.
So if I have read this right, after you have filed your US returns, you pay zero taxes in the US, only in the UK? 🤔
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