Moving money abroad

By THIS IS MONEY
Updated:

 

Telebanco cash machine

Bad idea: withdrawing money from a UK bank while living abroad is prohibitively expensive.

Many Britons are upping sticks to spend the rest of their days enjoying the sunnier climes that the continent or other continents have to offer. We explain exchange rates and the cheapest options for moving your money abroad and transfering it into foreign currencies such as the euro or the dollar.

Bank accounts

If you're going to live abroad it makes sense to open a current account with a bank in that country. And if you are buying a property there, it will be crucial. A native bank account will provide you with easy access to your cash and won't charge you for converting it into the right currency. The majority of High Street banks in the UK have networks abroad or are owned by foreign banks – for example, Abbey, Alliance & Leicester and Bradford & Bingley are owned by the Spanish Banco Santander – so it's worth going into your own High Street banking branch and asking for more information.

An alternative option is to open an account with one of the growing number of online-only banks. This way, you can access your money or check your statements via the internet, from anywhere in the world.

Help with currency rates

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Dollar bag

Moving savings

If your aim is to retire abroad, it is likely that you will have some savings that you intend to live off. Even if you don't but have sold your house in the UK to fund the purchase of a new one abroad, you may well have some money left over.

It is possible to keep your money sitting in an investment or savings account in the UK but – as soon as you are no longer a UK resident – you'll probably be restricted to how much you can contribute. You may also be liable to pay tax in the country you now live in on the income from any investments.

If you want to transfer the money to the country of your chosen residence, you can simply ask the bank you have chosen to do it on your behalf. But be prepared for some hefty transfer fees.

Alternatively, you can use a foreign exchange dealer that will inevitably charge less, as well as providing better rates on your money. If your savings are very substantial, taking this route can reduce costs significantly.

 

Don't forget: Typically, a dealer offer deals within 1% off the interbank rate, whereas your bank will be 2% to 3% worse than that.

 

The flipside is, the exchange dealer may well be a company with which you are unfamiliar, so you might have to do some extra homework. Remember that these dealers do not have to be regulated by the Financial Services Authority. A starting point is to see how long the firm has been in business and whether it is registered with HM Revenue & Customs.

And bear in mind that rates change constantly – so to find out who gives the best rate for the country you need, get quotes from several dealers.

Buying property abroad, transferring bank accounts, savings and investments, organising your pension and understanding your tax position is a complex procedure. So getting independent financial advice is crucial. And beware of 'poolside wisdom', which is often offered freely in many expat communities.

- Updated by Alan O'Sullivan, April 2009

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