The UK possesses a complex banking and financial structure, and moving to the UK requires people to open bank accounts and pay national and local taxes. Take a look at our guide to making setting up bank accounts, sorting out taxes, and overall finances in the UK.
No longer a member of the European Union and not a member of the Euro zone, the UK does not use the Euro. Instead it operates a separate currency known as British Pound Sterling (GBP), where 100 pence equals one pound.
|Coins:||1, 2, 5, 10, 20, 50 pence; £1 and £2 pound.|
|Notes:||£5 (colloquially called a fiver), £10 (tenner), £20, and £50.|
Banking in the UK
Once you have a UK bank account, you can conduct most of your banking online or on your mobile via your bank’s mobile apps. Employers usually pay their employees once a month, normally towards the end of the month.
Setting up a British bank account
Salaries are usually paid directly into bank accounts, so setting one up sooner than later is highly recommended.
The process of setting up an account is easy, though you will have to plan ahead as some may request that you arrange an appointment. UK banks such as Barclays, Lloyds, TSB, Co-Op, and National Westminster have high street branches (found on main roads in cities), and are extremely busy during the start of the college in the fall.
You will need identification such as a passport - or other proof of your ability to stay in the UK - and confirmation of address (usually a utility bill).
Customer service staff will help you fill out the appropriate forms and advise as to which account is most suitable for your needs. This may be a personal, student, joint, or business account.
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When you open a bank account you will be sent a checkbook and a debit card, which can be used to pay directly for items in shops and to obtain cash from cashpoint machines (ATMs). These machines widely available in all high streets and at many gas stations and shops, and most of them are free to use.
A confidential PIN number is provided by the card issuer and must be given every time you use the card. When using a debit card, it will only allow you to access money that is in your account. If you need to go over that limit, an overdraft has to be arranged with the bank and interest rates are charged.
Money transfer orders and electronic transfers can be arranged via banks. Income from property or business interests overseas can be sent to your UK bank account.
Credit cards and store cards are also available from VISA, Mastercard and many large stores. When using these cards, items are charged to your account. Payment has to be made at the end of every month. If the payment is not made in full, interest charges become payable and this can quickly become very expensive.
Taxes in the UK
In general expect to pay around one third of your income in tax, national insurance, and pensions. The Inland Revenue allows a tax free allowance per person of £11,000 GBP and then tax is levied on the remaining income.
Higher income earners can expect to pay much higher rates, for example income over £150,000 GBP is taxed at 45%. Additional tax relief is available for self employed people.
Taxation is complicated, and it is recommended to use an accountant as late submissions will incur extra charges. Take a look at HM Revenue & Customs for more information.
In addition, there is also a council tax that has to be paid annually. This is charged by the council of the area in which you are living to cover costs such as garbage collection, road maintenance, education, and libraries.
The amount varies from council to council, and depends on the tax band into which your home is placed.
Everyone has to contribute to the UK state pension scheme, and can take out additional personal pensions with authorized providers such as banks and insurance companies.
Loans and Mortgages
Accommodation can be rented or purchased. This is normally undertaken through estate agents and solicitors. Loans in the form of mortgages can be arranged with banks and building societies.
These loans have to be paid back over an agreed number of years, and at an agreed rate each month. Failure to meet the payments can result in the property being repossessed by the bank. Homes and personal possessions need to be insured.
Suitable policies can be purchased from insurance companies. The UK has a very complex insurance provision, and advice should be sought from specialists such as insurance brokers, banks, and estate agents.