Transferring Money to the US
You’re looking to send money to the US, and you’re eternally grateful that you’re doing it in the 21st century, where it’s as easy as a few clicks or taps. We’ve come a long way from hoping against hope that you’re not held up by a highwayman.
Transferring money today is a much simpler business, but there are still longer, more expensive options, and quicker, more affordable ones.
On this page, we’ll guide you through everything you need to know about sending money from the UK to the US, including typical costs, useful tips, and the best ways to do it.
What's on this page?
01 | How can I send money to America?
02 | The best way to transfer money
03 | How much does it cost?
04 | How long does it take?
05 | Minimum and maximum limits
06 | Tax implications
07 | What keeps my money safe?
08 | What next?
New York City, one of the most popular places to transfer money to
How can I send money to America?
To send cash on its way to someone in the US, you don’t need to use the services of a bank. It’s only one of your options.
These days, there are usually three options to choose from: banks, P2P (peer-to-peer) currency exchange platforms, and foreign exchange brokers.
Allow us to take you through each one.
Transferring money with a bank
This is the traditional option. You can send an international wire transfer from one bank to another through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network.
The SWIFT network comprises more than 10,000 banks in 200+ countries, so it’s certainly wide-ranging.
However, it’s also an expensive choice. There are usually several fees associated with SWIFT transfers, such as those charged by the sender and recipient banks, along with any charged by the intermediary banks.
Unless the sender and recipient banks have a strong relationship with one another, there can be up to three intermediary banks involved – which is a lot.
After all, banks typically apply a mark-up to the exchange rate, which is usually around 4-6% above the mid-market rate (the one you see on Google).
There’s more info on fees further down the page.
Transferring money with a P2P currency exchange platform
In the past decade, the arrival of internet-based peer-to-peer foreign currency exchange platforms has radically changed the market.
These platforms are generally much cheaper than the service offered by banks, mainly because they use the real, mid-market exchange rate, and charge very low fees.
In 2019, The Daily Telegraph reported that the exchange rates used by P2P platforms were on average 4% cheaper than those used by banks.
Importantly, these companies also offer a strong level of security. Every responsible P2P platform operating in the UK is authorised and regulated by the Financial Conduct Authority (FCA).
These services are called “peer to peer” because they match you with someone else around the world.
For example, if you’re looking to send £100 to the US, a company like Wise (formerly TransferWise) will find someone who’s looking to send around $130 to the UK, and use this pairing to fulfil the exchange.
If they can’t find anyone to match your transfer request, P2P platforms will simply buy the currency from the usual interbank markets – although this can then make the transfer more expensive.
That’s why exchanges in very common currencies (e.g. dollars, pounds, euros, and yen) are so cheap on P2P platforms, because there’s always demand on both sides. Users literally trade between themselves without any dealers getting involved.
Transferring money with a foreign exchange broker
Foreign exchange (FX) brokers are useful if you’re sending very large sums of money abroad, i.e. over £3,000. They charge fees for their services, but will typically waive (or reduce) these fees for larger transfers.
FX brokers also add a mark-up to the exchange rate, but this is typically much smaller than the mark-up usually applied by banks.
The key benefit of using an FX broker is the ability to set up a forward contract. This means you can set up future international money transfers with today’s exchange rate, so you won’t be affected by any negative changes.
The best way to transfer money from UK to the US
This depends on how much you’re sending, when you need it to arrive by, and how much you’re willing to pay in fees.
It’s ultimately up to you, and we absolutely recommend you talk to a qualified tax professional before you make a decision.
However, for an easy-to-use service that’s quick and good value for money, look no further than Wise (formerly TransferWise).
This Texas Longhorn steer has little use for money
How much does it cost to send money to the US?
It varies, based on what service you’re using, how much money you’re sending, and how you’re paying for it.
If you use banks to send an international wire transfer, you’ll be dealing with a marked up exchange rate and a sending fee, while your recipient will have to pay a receiving fee.
According to research by Finder in May 2020, you can expect UK banks to charge up to £40 as a sending fee for an international money transfer, and up to £7.50 as a receiving fee.
Meanwhile, on average, banks add a 4% mark-up to the mid-market exchange rate.
In contrast, P2P currency exchange platform Wise’s fees for sending pounds to the US currently range from a 1.13% fee on transfers of £100, to a 0.28% fee on transfers of £636,601 or more.
Wise also states that any transfers to the US of £15,000 or less should arrive at their destination by the end of the next day.
It also depends on how you pay for the transfer. For example, using a business debit card to transfer pounds with Wise incurs a 0.69% fee, while a credit card incurs a 2.45% fee.
Find out today how much it’ll cost you to use Wise.
Cheapest way to send money to America
In most cases, you’ll find the best rate with P2P foreign currency exchange firms, as they don’t tend to apply any mark-up to the mid-market rate.
For example, depending on the variables, Wise’s service can be up to 8x cheaper than the service offered by high street banks.
However, if you plan to send large amounts of money to the US at regular intervals, a forward contract with an FX broker will probably offer you the best value.
How long does it take to transfer money to the US?
Again, there’s a bunch of variables at play which can affect the length of time it takes to send pounds to the US. These include:
- The service you’re using
- The number of banks involved (SWIFT transfers can involve up to three intermediary banks)
- Whether the transfer falls on a weekend or public holiday
In general, the standard length of time for any international money transfer is between 0-5 business days, with banks generally taking longer than P2P platforms.
Are international bank transfers instant?
International bank transfers aren’t usually instant. For instance, if you send money to the US through NatWest, a standard transfer will take 2-4 working days.
Or if you choose to transfer money to the US with HSBC, it’ll “normally take up to four working days”.
In contrast, sending money abroad via P2P exchange platforms like Wise is typically much quicker.
For example, if you send £10,000 from the UK to the US via Wise, it’ll usually be in your recipient’s account by the next day.
And if you change your Wise payment method from a wire transfer to a debit card, you can cut down the time it takes even further.
It rarely if ever takes as long as an international wire transfer, because there are no intermediary banks involved.
Discover today how quickly you can transfer money with Wise.
Minimum and maximum limits for US money transfers
When it comes to maximum and minimum limits, there’s usually a bit of a trade-off between banks and P2P platforms.
Generally speaking, you pay higher fees to send cash via banks, but you can send larger amounts of cash; meanwhile P2P platforms keep fees low, but also impose smaller limits on how much you can send.
For example, Wise allows transfers of no more than £10,000 per day (if paying via debit or credit card), whereas HSBC allows you to send up to £50,000 online, and as much as you want from a branch.
However, if you’re not looking to send vast sums of money abroad, P2P foreign exchange firms also come with very favourable rules for minimum payments.
Wise simply requires you to transfer at least $0.01, while services such as Western Union require a minimum payment of just £1.
While some banks also do not impose a minimum limit on payments, their large flat fees can make small transfers rather uneconomical.
Tax implications of transferring money to the US from the UK
Please be advised that while every effort is made to keep this information up to date, Movehub does not provide tax advice, and you should always consult a tax professional about your unique circumstances.
Tax implications for the sender in the UK
Dan Allen, senior press officer at HMRC, told us: “There wouldn’t be any tax implications in the UK.
“If it’s money you’ve earned, any taxes would’ve already been applied. What happens when it actually arrives in the US is a matter for the IRS.”
Rachel Finch, the managing director of tax advisers Finch & Associates, agreed that a money transfer “does not attract tax immediately”.
However, she added that the transfer “could potentially be liable to Inheritance Tax if the sender dies within seven years of making the gift.”
Before sending any money internationally, it’s important that you consult with a professional accountant and/or HMRC to ensure that you’re acting in full compliance with regulations.
Tax implications for the recipient in the US
Finch told us: “In the US, if the amount transferred exceeds $15,000 in a year, then the transfer could be liable to Gift Tax.
“If money is being transferred between jurisdictions, make sure that both the sender and recipient keep good records of how much was sent, and why.
“Money coming in from foreign countries can create a ‘red flag' for the IRS, so it's important that you have all of the details and explanations ready in case it is queried,” she added.
“Also, if someone is liquidating assets to then transfer funds, make sure that you understand the tax implications of what has been sold before you do it.”
Before sending any money from the UK to the US, we strongly advise that you consult the services of a qualified tax professional, to ensure that you are acting in full compliance with UK and US law.
What keeps my money safe when I send it to the US?
There are governing bodies in the UK and the US whose job it is to ensure that every bank and P2P currency exchange platform is operating responsibly, so that every customer’s money is protected.
Money transfer safety measures in the UK
All P2P currency exchange firms with registered offices in the UK are administered by HMRC, so they’re compelled to follow all UK Money Laundering Regulations.
Plus, as ‘payment institutions’, all money transfer firms are monitored by the Financial Conduct Authority. Before sending your money with any currency exchange company, you should check to see if they’re on the FCA register.
Money transfer safety measures in the US
The Bank Secrecy Act means the Internal Revenue Service (IRS) and other government bodies must report information about any cash transactions over $10,000 (£7,600) and wire transfers over $3,000 (£2,300).
And some companies which specialise in money transfers report all transfers of $1,000 (£760) or more.
Your recipient must also submit Form 3520 – the Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts – to the IRS if they receive:
- More than $100,000 (£76,000) from a non-resident individual or foreign estate
- More than $15,600 (£11,800) from a foreign business or foreign partnership, including individuals related to those businesses or partnerships
All of these actions are taken to combat the risk of fraud, money laundering, and tax avoidance, and come with stringent penalties for non-compliance.
Bank details required to transfer money to the US
You’ll need banking details, as well as a few other pieces of information, to carry out a money transfer from the UK to the US. Here they are:
- Your name, contact information, proof of address, government-issued photo ID, and banking details, including your account number
- The amount of money you sent
- The recipient’s name, contact information, proof of address, and government-issued photo ID
- If you’re transferring money via a bank transfer, you’ll also need the financial details of the recipient, including their SWIFT code
You should now be much more knowledgeable about how to transfer money from the UK to the US. As you can see, there are multiple options available to you, and they each come with their own benefits.
If you’re tempted by a P2P foreign currency exchange platform, look no further than Wise.