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Guidance on Barclays closed account due to dormancy (Wise or Swift transfer?)

Guidance on Barclays closed account due to dormancy (Wise or Swift transfer?)

Old Jul 31st 2023, 11:41 am
  #1  
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Default Guidance on Barclays closed account due to dormancy (Wise or Swift transfer?)

Hello all!

Background story:

I am a British citizen, and have been living in the US since 2019 and I left my Barclays checking and savings account completely untouched since I left the UK (nothing going in and out).

A couple of weeks ago I received a text from Barclays saying the entire £9k-ish amount in my current account had been paid out. When I logged in, it said "DORMANCY HOLD" as who the payment was made to. I tried calling a few times but had long holds and had to give up.

Then last week my online access went away. I finally got connected to customer support on the phone and they basically said that they had closed my current account due to inactivity (they claim they sent me several letters to my US address, but I did not receive a single one, even though I received a new debit card from Barclays in July).

I told them that I would be visiting the UK for 6 days in August and they said that I can just walk into a branch and do a dormancy form to recover my money. They put a 5-year hold on my savings account (which has about £17k) so that it doesn't get closed automatically.

Now, they said that the money can be transferred to my US Bank of America account via Swift using the dormancy form. I am quite inexperienced on this, and from reading up on it, it sounds like that will cost me quite a bit of money.

So, I am thinking of using a Wise GBP account (I am also new to Wise - currently waiting for them to verify my address) and asking them to transfer the dormant current account money (£9k) there (via the Wise UK bank sort code and account number). I am also going to ask them to close my savings account and ask them to transfer the £17k there to the same account.

Eventually I plan on transferring the Wise GBP to my US Bank of America account.

Questions:

1) Is using Wise for this purpose a good course of action, or should I just stick to doing Swift to US Bank of America account?
2) Would there be some tax (IRS) paperwork to fill out if I am just doing the Wise GBP transfer? What about in the future when I transfer from Wise GBP to US Bank of America account? The Barclays account basically has the money remaining from my income in the UK while I was working there.

Thank you very much for reading and I would appreciate any feedback!
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Old Jul 31st 2023, 1:12 pm
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Default Re: Guidance on Barclays closed account due to dormancy (Wise or Swift transfer?

I think going the Wise bank account route is a good move. As to taxes there is nothing taxable when transferring funds to the US. But you mention a savings account as well as a checking account. The interest generated from those accounts is taxable and should have been declared each year when you filed your US taxes. If the tax on the income has been paid then no problem.
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Old Jul 31st 2023, 1:50 pm
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Default Re: Guidance on Barclays closed account due to dormancy (Wise or Swift transfer?

Originally Posted by durham_lad
I think going the Wise bank account route is a good move. As to taxes there is nothing taxable when transferring funds to the US. But you mention a savings account as well as a checking account. The interest generated from those accounts is taxable and should have been declared each year when you filed your US taxes. If the tax on the income has been paid then no problem.
Thank you so much for the response!

I did get a tiny amount (like £8 to £11) of annual interest from the savings account, and I think Barclays was automatically taking UK tax out of it. I had no idea I had to report that to the IRS!
I have been filing FBAR on time every year (from 2020 till current year). Can this really cause a major issue with the transfer?

Thanks!
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Old Jul 31st 2023, 2:05 pm
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Default Re: Guidance on Barclays closed account due to dormancy (Wise or Swift transfer?

Wise is a good idea. No IRS forms required when transferring money, but as you are aware you need to report foreign accounts on the FBAR and Form 8938 with your tax return if you meet the thresholds. https://www.irs.gov/forms-pubs/about-form-8938

All interest and income is reportable to the IRS whether or not the UK taxes it. It is entirely possible that there would be no additional tax to pay to the IRS as any UK tax paid may exceed that due to the IRS, if it does not then you owe them the balance. Either way you have to report it. In any case because you have reported your accounts as required (assuming Form 8938 does not apply) then the oversight should not cause any major issues. It will not impact any transfers either. Technically you should refile the prior 3 years tax returns to declare the overseas interest, but since it is such a tiny amount and you have reported your foreign accounts I might just let it go. Report it going forward for the tax years in which you keep the account open. Had you not reported your accounts, even the tiny amount of interest would be a much bigger deal so you should pat yourself on the back for getting that all in order from the start.

Last edited by Glasgow Girl; Jul 31st 2023 at 2:08 pm.
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Old Jul 31st 2023, 7:14 pm
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Default Re: Guidance on Barclays closed account due to dormancy (Wise or Swift transfer?

Originally Posted by bandor
Hello all!

Background story:

I am a British citizen, and have been living in the US since 2019 and I left my Barclays checking and savings account completely untouched since I left the UK (nothing going in and out).

A couple of weeks ago I received a text from Barclays saying the entire £9k-ish amount in my current account had been paid out. When I logged in, it said "DORMANCY HOLD" as who the payment was made to. I tried calling a few times but had long holds and had to give up.

Then last week my online access went away. I finally got connected to customer support on the phone and they basically said that they had closed my current account due to inactivity (they claim they sent me several letters to my US address, but I did not receive a single one, even though I received a new debit card from Barclays in July).

I told them that I would be visiting the UK for 6 days in August and they said that I can just walk into a branch and do a dormancy form to recover my money. They put a 5-year hold on my savings account (which has about £17k) so that it doesn't get closed automatically.

Now, they said that the money can be transferred to my US Bank of America account via Swift using the dormancy form. I am quite inexperienced on this, and from reading up on it, it sounds like that will cost me quite a bit of money.

So, I am thinking of using a Wise GBP account (I am also new to Wise - currently waiting for them to verify my address) and asking them to transfer the dormant current account money (£9k) there (via the Wise UK bank sort code and account number). I am also going to ask them to close my savings account and ask them to transfer the £17k there to the same account.

Eventually I plan on transferring the Wise GBP to my US Bank of America account.

Questions:

1) Is using Wise for this purpose a good course of action, or should I just stick to doing Swift to US Bank of America account?
2) Would there be some tax (IRS) paperwork to fill out if I am just doing the Wise GBP transfer? What about in the future when I transfer from Wise GBP to US Bank of America account? The Barclays account basically has the money remaining from my income in the UK while I was working there.

Thank you very much for reading and I would appreciate any feedback!
are you not paying class 2 NIC? I Pay every year, so that maybe helps keep my HSBC account from a similar fate by having some activity. They sent me forms and know I am a US person now.
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Old Jul 31st 2023, 7:17 pm
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Default Re: Guidance on Barclays closed account due to dormancy (Wise or Swift transfer?

There’s also a difference b/w a U.S. versus a UK-domiciled Wise account.
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Old Jul 31st 2023, 7:31 pm
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Default Re: Guidance on Barclays closed account due to dormancy (Wise or Swift transfer?

Originally Posted by Glasgow Girl
Wise is a good idea. No IRS forms required when transferring money, but as you are aware you need to report foreign accounts on the FBAR and Form 8938 with your tax return if you meet the thresholds. https://www.irs.gov/forms-pubs/about-form-8938

All interest and income is reportable to the IRS whether or not the UK taxes it. It is entirely possible that there would be no additional tax to pay to the IRS as any UK tax paid may exceed that due to the IRS, if it does not then you owe them the balance. Either way you have to report it. In any case because you have reported your accounts as required (assuming Form 8938 does not apply) then the oversight should not cause any major issues. It will not impact any transfers either. Technically you should refile the prior 3 years tax returns to declare the overseas interest, but since it is such a tiny amount and you have reported your foreign accounts I might just let it go. Report it going forward for the tax years in which you keep the account open. Had you not reported your accounts, even the tiny amount of interest would be a much bigger deal so you should pat yourself on the back for getting that all in order from the start.
Thank you for the response! We generally do our taxes via TurboTax and go through the wizard about foreign assets and it tells me about filing FBAR (wife doesn't meet threshold). I am guessing 8938 would have been included with our filing if TurboTax thought it was necessary (will have to look back at the filing later).
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Old Jul 31st 2023, 7:34 pm
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Default Re: Guidance on Barclays closed account due to dormancy (Wise or Swift transfer?

Originally Posted by destone
There’s also a difference b/w a U.S. versus a UK-domiciled Wise account.
Could you please elaborate on this? I tried Googling but am not sure what you mean. I live permanently in the US (LPR) and have no UK address.

Much appreciated!
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Old Jul 31st 2023, 7:38 pm
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Default Re: Guidance on Barclays closed account due to dormancy (Wise or Swift transfer?

Originally Posted by tht
are you not paying class 2 NIC? I Pay every year, so that maybe helps keep my HSBC account from a similar fate by having some activity. They sent me forms and know I am a US person now.
Unfortunately never got around to setting that up. I remember discussing that on this forum back in 2019!

The really unfortunate part of this is that I was originally supposed to visit UK in June, and I would have used my Barclays debit card when I got there. But then I got COVID just before the trip, and had to delay it till August. Then in mid July they sent me that text saying they paid out the entire amount from my current account!
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Old Jul 31st 2023, 8:11 pm
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Default Re: Guidance on Barclays closed account due to dormancy (Wise or Swift transfer?

Originally Posted by bandor
Unfortunately never got around to setting that up. I remember discussing that on this forum back in 2019!

The really unfortunate part of this is that I was originally supposed to visit UK in June, and I would have used my Barclays debit card when I got there. But then I got COVID just before the trip, and had to delay it till August. Then in mid July they sent me that text saying they paid out the entire amount from my current account!
you should look at the class 2 nic now…
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Old Jul 31st 2023, 8:39 pm
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Default Re: Guidance on Barclays closed account due to dormancy (Wise or Swift transfer?

Originally Posted by bandor
Could you please elaborate on this? I tried Googling but am not sure what you mean. I live permanently in the US (LPR) and have no UK address.

Much appreciated!
I’ve not heard of differences between UK and US domiciled accounts either. Our daughter was living in the USA with no UK address (and had been for over 30 years) when she opened her Wise GBP account and used it for 2 or 3 months paying UK bills etc.

My wife and I are UK domiciled and have USD Wise accounts linked to our US Vanguard accounts to transfer USD into.

Last edited by durham_lad; Jul 31st 2023 at 8:42 pm.
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Old Jul 31st 2023, 9:10 pm
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Default Re: Guidance on Barclays closed account due to dormancy (Wise or Swift transfer?

I have a UK Barclays account that I've maintained for over a decade. For future readers, the best way to do this:
- As tht mentions, use your UK account for your monthly payment of Class 2 NICs for the UK state pension by direct debit. It's an amazing deal, and still a good deal if you aren't working and have to pay Class 3 contributions instead. This will also keep your accounts active.
- After you leave the UK, tell your UK bank that you aren't tax resident in the UK any more. They should then stop withholding UK tax from your interest payments.
- UK interest payments are taxable by the IRS. I disagree with Glasgow Girl on the US tax owed possibly being zero due to paying UK tax. If you are not tax resident in the UK, then you shouldn't be paying UK tax in the first place, and so there is no foreign tax to claim against US tax owed. If you paid UK taxes when you shouldn't, that's your problem, not the IRS's. That said, I can't imagine the IRS would come after anyone for $1 or $2 per year tax owed.
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Old Jul 31st 2023, 10:39 pm
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Default Re: Guidance on Barclays closed account due to dormancy (Wise or Swift transfer?

Originally Posted by Owen778
I have a UK Barclays account that I've maintained for over a decade. For future readers, the best way to do this:
- As tht mentions, use your UK account for your monthly payment of Class 2 NICs for the UK state pension by direct debit. It's an amazing deal, and still a good deal if you aren't working and have to pay Class 3 contributions instead. This will also keep your accounts active.
- After you leave the UK, tell your UK bank that you aren't tax resident in the UK any more. They should then stop withholding UK tax from your interest payments.
- UK interest payments are taxable by the IRS. I disagree with Glasgow Girl on the US tax owed possibly being zero due to paying UK tax. If you are not tax resident in the UK, then you shouldn't be paying UK tax in the first place, and so there is no foreign tax to claim against US tax owed. If you paid UK taxes when you shouldn't, that's your problem, not the IRS's. That said, I can't imagine the IRS would come after anyone for $1 or $2 per year tax owed.

rates have been close to 0% anyway until recently, so these ankommst should be low.. I believe there is a threshold below witch you don’t even get a 1099-INT

and I would second the above view, the DTA only applies to tax that you are legally required to pay, this is to prevent people choosing where to pay tax and then taking a credit…
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Old Jul 31st 2023, 11:51 pm
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Default Re: Guidance on Barclays closed account due to dormancy (Wise or Swift transfer?

Originally Posted by tht
rates have been close to 0% anyway until recently, so these ankommst should be low.. I believe there is a threshold below witch you don’t even get a 1099-INT
Agreed. I seem to remember the limit is $10 of income, though I could be wrong.
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Old Aug 1st 2023, 12:01 am
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Default Re: Guidance on Barclays closed account due to dormancy (Wise or Swift transfer?

Originally Posted by bandor
Could you please elaborate on this? I tried Googling but am not sure what you mean. I live permanently in the US (LPR) and have no UK address.

Much appreciated!
U.S. domiciled Wise accounts must share data with the IRS.
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