value of the pound against the Dollar
 

Has anyone been watching the exchange rate recently? I have never seen it this low in the 22 years we have been here. When we arrived it was about 1.45, today it dropped below 1.18! Reading the papers, even the Daily Mail is talking about a crisis due to the price of energy in the coming year.

Re: value of the pound against the Dollar
 

Hard to believe the Euro is worth about the same as a Dollar.

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I am guessing the USD, GBP, EUR will all eventually settle on a 1:1:1 or thereabouts, for various reasons, but the dollar should be on equal par with those two

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The Euro, sure it's been there before.
What's hard to believe is the pound and dollar being almost the same.
Messes my pensions right up. can't recall the deposits ever being this low.

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I share the pain. Unfortunately I don't see it getting any better.

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The USD is strong as the markets expect Powell to do a better job at controlling inflation, i.e. will increase interest rates more aggressively, than Lagarde and Bailey.

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You dont need to tell me about it. I moved here late last year and "short term" Im working for my UK company still and earning in £. Its killing my monthly income and Im around $600 a month down on what I was sending over back in January. I really hope it settles soon as every day its just going lower and lower and lower.

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Are UK pensions still 'triple locked' or whatever it's called?
At least UK pensions are "linked" when living in the US as opposed to Canada and Australia. Some older retirees there now get practically nothing.

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The triple lock is suppose to be reinstated this year.

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On the plus side, my alimony payments back to the wicked witch in the East are lower paying with $$$'s

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How long do those last? Until kids get to 18? Sorry, just curious

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Every cloud................. I console myself by the thought I don't have to pay US income tax on the money lost to the lower exchange rate. Which with State income tax comes to about 32% of what I didn't get. :unsure:

Re: value of the pound against the Dollar
 

Just spent six weeks in UK. Wow, I couldn't believe the exchange rate we were getting! The news over there is very depressing, had to shut off listening to it. People out in the coffee shops drinking coffee like mad. Airport not too bad. No problems at Heathrow. Rained three times in six weeks. All lawns parched, rivers drying up, sewage leaking into the sea. A lot of high street shops closed and boarded up. Marks and Spencer seem to be doing a roaring business - especially from me. I don't drink tea, and never have. I have always been either coffee or cold drink person. You can't find ice anywhere (I know I've got used to it), especially in a heat wave. Also, not having AC in many places (90 degrees is tough anywhere). The countryside still looked nice. Litter as bad as ever. Restaurant food prices have shot up, as they have here. All in all a good trip, lovely weather when the heat wave departed, enjoyed the delayed wedding (Covid). Oh, I forgot, I have had four Prizer shots, but I got Covid over there. Quite sick for a few days, sore throat, etc. We took tests with us. Several family members had it at different times. Seems very infectious over there. Yes, my small British state pension has taken a hit. Hope for a good rise next April! Glad to be back in the US. The car parking in the UK will drive you crazy.

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Life time, until she re-marries or dies.

Nothing to do with any children, that's a separate issue.

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I'm annoyed, after 15 years of sending money to the UK to pay my mortgage on my flat in the UK when the £ was high . It's now paid off and the value of the amount I'm getting from the renters is falling week by week :)

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Question, having recently returned to the UK from the States, I still have a bank account there with a nice amount in it. I look at the pound against the dollar ratio, do the sums & I’m wondering if I should transfer a certain amount from the US to the UK before the pound rises again (not that I think it will go up anytime soon).

Re: value of the pound against the Dollar
 

We have because we are moving back to the UK in 18 months or less. Kind of depressing to see how things are going in the UK at the moment but we still think it's better than staying in Texas! Hopefully, by 2024, things will be looking up but no doubt the Tories will still be in power as Labour seems stuck in some sort of rut. As we are moving back to Scotland, we will have the joy of the SNP and Nicola Sturgeon. Like the Tories, despite all the scandals the press has reported, they seem to be unbeatable!

Re: value of the pound against the Dollar
 

If you have money in a bank account it is bleeding value daily because of inflation, so you need to do something with it.

Currently the pound sterling has been squeezed by two significant factors that could easily be reversed, but might not be any time soon. :unsure:

Specifically, during times of war and major uncertainty, in this case the war in Ukraine, money flows into the US and pushes up the value of the dollar, and the UK, and the value of sterling have also suffered because of the political uncertainty caused by the Boris Johnson fiasco. Obviously the war in Ukraine isn't going to end quickly, but ending the uncertainty of the leadership of the British government, by the appointment of a new PM, may be enough to stop the slide in the value of sterling.

Re: value of the pound against the Dollar
 

Can I ask - how does that work? I thought the IRS had an exchange rate that accountants/CPAs use, and that value then becomes your income in USD.

I'm in the same boat as many people here. I only got one year in the US with a good exchange rate, then you-know-what happened and the value started to slide. Truly depressing. I can only remind myself that money isn't everything.

Re: value of the pound against the Dollar
 

The IRS website says to use an exchange rate from a reputable source such as XE.com for ad-hoc transfers but for periodic transfers such as monthly pay or pension payments then by end of January they publish an annual average exchange rate that you can use. Since I live in England I use the HMRC monthly published rate. Just Google IRS exchange rate to find the average rate for each year.

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I think all he's saying is that, although he is getting a lot less in USD due to the poor exchange rate, he's also paying less tax, because his USD income is lower.

Re: value of the pound against the Dollar
 

A possibility is that (like me) he has his pension (if that is what he is referring to) sent directly to his US account, where it arrives in dollars, no exchange rate calculation necessary.

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Now back in the US again, yesterday was interesting breakfast in London and dinner at home in Oregon with the Mrs L.

Spot on mate that is exactly what I meant.

Re: value of the pound against the Dollar
 

Well now it’s as high as I can ever remember it ($ to £)

if we do transfer $ to UK, I presume a gain is calculated for tax when we do our next IRS Return?

if you have a UK rental property with a buy to let interest only mortgage coming up for paying-off the balance in the next 12-18 months, it’s not a bad time to be moving money is it…?

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I believe you will only be subject to taxes on transfers if you engage in buying and selling currency with the aim of making a profit by timing the currency market. Where did this money come from that you would be sending to the UK?

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If you make a one-way exchange there's no "base cost" to calculate a gain against. You had USD110,000, now you have GBP100,000 ... where's the gain? There isn't one. Now, if the pound were to recover, and you were to convert GBP100,000 back into USD130,000, then you would have a USD 20,000 taxable gain.

Hypothetically, if you had previously transferred GBP78,500 to the US and received USD110,000 (@ USD/GBP 1.400), then you might have a USD23,650 gain (GBP21,500 @ USD/GBP 1.100). I am not sure how long a gap the IRS would need for the two transactions to be seen as independent. If the money sat in an account between the USD being credited and then transferred out and used to buy GBP then you might find it difficult to argue that the transactions aren't linked and the gain taxable, but if the USD arrived and was used to buy a house, or a car, then other money waws accumulated from income/ earnings, or the sale of an unrelated asset, then so long as there was a fair gap, I would say that the IRS won't be able to make a link and tax the difference. I don't know for sure, but I would guess that you should allow at least 24 months to avoid the IRS trying to link the two transfers.

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Yep, that makes a lot of sense. It’s earned income (so will be reported as such and taxes paid)

In essence, it’s not GBP moved to USD then back. Also certainly much more than 2 years elapsed since any transfers.

I know you are not a tax advisor not lawyer, but as always I appreciate your input Pulaski (and others here)

In fact, I think it was Pulaski who once made me think twice about paying off the balance on a UK interest only mortgage early. Good advice.

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Well, this is truly depressing. Looks like I need to keep the GBP in the UK for the forseeable future.

Are there any financial experts anyone uses who are aware of the specific requirements of UK expats living in the US? I know that having a large amount of cash in a foreign currency is another layer of complexity.

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Although I’ve recently returned to the UK I still have a US bank account with a nice amount in it & looking at the falling pound against the dollar I’m looking into transferring the US funds to the UK before Sterling goes back up, will I be taxed on the transfer in the future, also will I set off alarm bells with the IRS for transferring a substantial amount. I have transferred money before from the US to the UK without any repercussions.

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There is very little extra complexity in holding large amounts of foreign currency. It needs reporting with an FBAR filing and if the amounts are large enough also reported on your IRS return but no extra taxes

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Absolutely no problem in transfers of large amounts from the US to the UK. This year I transferred $50k in a lump sum to buy a new car and do some house improvements.

If you then transfer the money back to take advantage of moving exchange rates then you may be subject to taxes on exchange rate gains but I have no idea what gap is needed between transfers to avoid that.

Re: value of the pound against the Dollar
 

I’ll start by saying I’m not a financial expert. I do know that if you have money in non US accounts but you live in the US, then you may have tax to pay in the countries where the money is (on interest earned), and you are expected to declare the accounts and values held in a Foreign Bank Account Report (FBAR)

You are required to file FinCEN Form 114 (an FBAR) if the combined balance of all the foreign accounts you own or have a financial interest or signature authority is more than $10,000 at any point during the calendar year. Look up FBAR in a search engine for more info.

If it’s money in a UK account paying interest, then you may need to pay tax to UK HMRC. You report the income in a self assessment tax return in the UK. You may have been taxed at source by the bank/financial institution but you can have that stopped if you live outside the UK and then pay the taxes due when you file your UK return (if you earn enough to require a payment of tax to HMRC). I believe that if you do pay tax on the interest in the UK, then you report that payment in your US IRS tax return because a dual taxation treaty exists and the IRS won’t expect US taxes to be paid on income you already paid tax on in the UK.

I think that’s the layer of complexity you mentioned? Others may have additional information or corrections!

See Pulaski’s reply above for thoughts on financial gain from selling GBP for USD. In my scenario I earned money in USD, and I’m making a one time move from USD to GBP for a financial transaction in the UK (to pay off a debt at the end of a loan period). In my case I believe no “gain” to report as income, in terms of the purchase of GBP using my USD.

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You should not be paying UK tax on bank interest and can file a form with the bank (R43?) if you are not resident in the UK to stop them deducting taxes.

If you need to reclaim taxes already paid on bank interest then I don't believe you need to file a self assessment with HMRC but instead can send in form R40 to get that tax refunded. You can do it by post or online if you have a UK Government Gateway account.
https://www.gov.uk/government/public...nvestments-r40

Re: value of the pound against the Dollar
 

To be clear, I was not saying you definitely need to pay tax to HMRC. You’re right about the stopping of tax deductions by the bank, but just to be clear, that does not mean you don’t have to pay tax to HMRC.

For example, if you have a UK income, such as salary or property rental income. If your total income exceeds the lower earnings limit, including any interest earned on UK accounts, then you have a UK tax liability to pay, even if you’ve informed your bank you’re non resident and they stop deducting the tax at source.

I don’t think durham_lad is saying that you won’t have taxes to pay on interest earned. I’m just making it clear I wasn’t saying you must pay tax on it, but it depends on the total income you have in the UK.

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Yes, I should have been more clear. Thanks for the correction.

More info here

https://www.gov.uk/tax-uk-income-live-abroad

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I wanted to transfer funds from my bank in the US to my bank in the UK. My bank sent me instructions saying I should use Zelle international transfer, unfortunately all I could see was for domestic transfer within the US, I shall keep trying.

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Use Wise.com, it’s easy and has the best rates.

Re: value of the pound against the Dollar
 

Thanks for your response Glasgow girl. I noticed one of the other posters on here durhamlad uses Wise. May I ask, how does Wise work? Do I go on their website & open an account & then transfer funds to Wise? Before I go down that route I’m going to give my bank another try as I’ve sent significant amounts of money to the UK before & because I’m a preferred account holder they never charge a fee to transfer. Once again, thanks.

Re: value of the pound against the Dollar
 

Zelle is not an option as far as I know.

WISE is good. Open an account, download the Wise.com app too. Follow their process. It’s good, secure, and fast.

Re: value of the pound against the Dollar
 

Your bank may have "never charged a fee", but the exchange rate applied to your transfer may be disadvantageous, or worse.

I have heard that HSBC is like that, and that you end up with more currency at the other end if you use a transfer service like Wise, than using a bank transfer "with no fee charged".

This may not be true if you're transferring big bucks, say $100k+ at a time, and your bank is applying a "dealing desk rate", which is often competitive with online FX broker-remitters.

To get a definitive answer you would need to set up two transfers side by side at the same time, then see which one will put more money in your account, and only click to accept the one that credits your account with the most money.