The Relocation Bureau

Managing your finances

Banking & Finance

Need to open a UK bank account? This section explains how UK Banking works. There’s information on the major banks, especially those that welcome incoming expats, and we go on to explain how everything works, and what information you’ll need to open an account. We even show you how to write a cheque! We then also discuss UK cash machines, debit and credit cards, and how to build a UK credit rating. We finish by discussing mortgages, loans, and building societies.

Banking in the UK

Opening An Account

If you're going to be in the UK for more than a few months, it makes sense to both open a UK bank account, and to get at least one UK debit or credit card.

You can open an account with either a traditional bank or building society that often has both a branch network and internet banking facilities, or with an internet-only bank.

Account opening requirements vary, but in general you'll need to complete an application form and provide proof of identity such as a passport. A letter of introduction from your current bank, and an employer's reference letter, are usually well received.

Most towns in the UK have branches of the major British banks including National Westminster (NatWest), Barclays, HSBC (formerly Midland Bank), Lloyds TSB, Halifax and Abbey. Other major banks with branches in larger towns include Royal Bank of Scotland and Bank of Scotland.

www.natwest.co.uk
www.barclays.co.uk
www.hsbc.co.uk
www.lloydstsb.com
www.halifax.co.uk
www.abbey.com

The NatWest Bank is part of the Royal Bank of Scotland Group, one of the largest banking groups in the UK, with over 1500 branches nationwide and access to many thousands of ATMs.

Building Societies

Building Societies are mutual companies that were once the primary source for mortgages for homebuyers.

Nationwide Building Society is the largest of the few remaining mutual building societies and competes very successfully with the major banks, offering a range of accounts and financial services.
www.nationwide.co.uk

Business Hours

Business Hours for banks are usually between 09.30 and 15.30 on Mondays to Fridays and 09.30 to 12.30 on Saturdays. Building society branches usually have longer opening hours.

Internet-only Banks

Internet-only Banks, i.e. Smile, Cahoot and Intelligent Finance, have all been started by their parent companies in recent years. Their innovation and use of technology has encouraged other banks to make major improvements to their services.

Other Financial Services

Major supermarkets and department stores, i.e. Tesco, Sainsbury's and Marks and Spencer, have also introduced a range of financial services for their customers.

Some Brief Banking History

With the introduction of telephone and internet banking, many small town branches have been closed in recent years. This has resulted in whole communities in rural areas being without any local bank branch. Under pressure from the public, local businesses and government the big four banks, Barclays, HSBC, NatWest and Lloyds TSB are now planning to introduce a joint banking service for these rural areas.

The deregulation of the banking industry in the UK in 1987 resulted in banks and building societies competing with each other on the whole range of financial services. Many building societies (such as Halifax and Abbey National) subsequently demutualised and converted to banks owned by shareholders. This in turn resulted in a number of mergers and takeovers and enabled the long established banks to benefit from the specialist products, services, and customer base of the former building societies. Demutualised insurance companies were also bought by these larger banks but still trade under their own name.

Useful Websites

www.thisismoney.co.uk
www.moneysupermarket.com

Expatriate Banking

The Relocation Bureau has an established relationship with National Westminster Bank (Nat West) providing an efficient expatriate banking service to our clients.

Further information is available below. Clients of The Relocation Bureau can be provided with information packages and documentation supplied by Nat West.

Offshore banking may be an option for you while you are working in the UK. Nat West will be pleased to help you as will an independent advisor who is recommended by The Relocation Bureau.

NatWest Global Employee Banking

The Relocation Bureau has an established relationship with National Westminster Bank via its Expatriate Service team.

Nat West is part of the Royal Bank of Scotland Group, one of the largest banking groups in the UK, with over 1500 branches nationwide and access to many thousands of ATMs. Its Global Employee Banking service has been in operation for over 15 years and the team has assists many international companies, including those setting up in the UK for the first time. NatWest is the only UK clearing bank with a track record of first class service for incoming expatriates, and the Global Employee Banking service provides a fast track account opening service to employers for their international assignees coming to the UK. There are two principal service options:

Primeline International Personal Banking
UK based banking Offshore banking in Jersey, CI
For assignees earning up to £50K pa For assignees earning over £50K pa
Telephone and internet service
UK sterling account Multi currency accounts
No fee Sterling credit card
Full UK banking services Full UK and Offshore banking services

Over the years many of our clients have found this service useful. Accounts can be set up ahead of a transfer to the UK, meaning that funds are immediately available for assignees on arrival. The Relocation Bureau are pleased to provide access to this service as part of our overall service to you and your company. Account opening packs are available for clients from our office, and the forms can also be downloaded from NatWest's web site, detailed below. Please note that NatWest can only FastTrack account opening where they have established a relationship with your employer. This does not need to be a banking relationship, but your employer must have signed up to this free of charge NatWest scheme.

Contacts

NatWest Global Employee Banking
P.O. Box 3686
6 High Street
Chelmsford
Essex, CM1 1AZ

Phone: +44 (0)1245 355628
Fax: +44 (0)1245 490627

Email: employee@natwestglobal.com
Web: www.natwestinternational.com/global

BANK ACCOUNTS

The Current Account (or Cheque account) will normally be your main account. Most people in the UK have their salary paid into this account and also pay their bills either by standing order or direct debit from this account. Telephone and internet banking is now available with most banks for managing your current account.

You will be issued with an ATM Cash/Debit card and a cheque book, which will also include paying in slips, for each account that you open. There will be no charge for opening the accounts or for the issue of cards and cheque books.

The ATM / Cash card doubles as a Debit card allowing you (for example) to pay a supermarket bill directly from your account. It can also be used as a cheque guarantee card up to about £100 so guaranteeing payment of your cheque to a retailer.

When you present your cheque with the card to a retailer, the retailer will write the card number on the back of the cheque. The bank guarantees payment of the cheque, up to the amount printed on the card. This system operates throughout the UK and enables retailers to accept "out of town" cheques without concern.

Bank Interest and Charges

Banking is free with most banks, if your account is in credit, and interest is also paid on current (cheque) accounts at rates varying between 0.25% to 3%. Internet only banks usually pay the higher rates of interest.

Bank Charges, if any, vary widely from bank to bank. Some banks will charge you a monthly fee; others charge per cheque and per direct debit; most though are free provided you maintain a certain minimum balance. The banks that do charge a fee usually offer other services; for instance, an automatic overdraft in the region of £15000.

Savings

If you continually keep a large balance in your current account, e.g. more than £1000, then a High Interest Cheque Account may be available. Any regular large surplus at the end of the month will be better off in a Savings Account.

Tax

Tax is paid on the interest added to your account and will be deducted at source by the bank at the basic tax rate, currently 20%. You will still need to declare this interest on your annual tax return therefore you must retain all of your bank statements which will show the interest paid to you. If your salary puts you into the higher tax bracket, currently 40%, extra tax on the interest may be due.

Overdrawn Accounts

If you overdraw your account you will incur high charges if you haven't previously arranged for an authorised overdraft.

An authorised overdraft is often provided automatically when you open the bank account, usually £250. If it is not then it will be worthwhile asking as the bank will charge you for being overdrawn even by a few pounds for one day.

Interest charged on authorised overdrafts is usually less than 1% per month.

A typical charge for an unauthorised overdraft is 30% annual interest + £10 per month.

HOW TO OPEN A BANK ACCOUNT

Account opening requirements vary, but in general you'll need to complete an application form and provide proof of identity such as a passport and a UK tenancy agreement. A letter of introduction from your current bank, and an employer's reference letter, are usually well received.

Process

The procedures for opening a bank account are fully explained in the British Banking Associations website

www.bba.org.uk

For specific information, the Royal Bank of Scotland has a section on opening an account with them. The procedures which the Royal Bank of Scotland use are those which are applicable to UK residents and which most UK banks follow.

personal.rbs.co.uk

The proof of identity required is that which UK residents need to provide. Expatriates may not initially be able to satisfy all the requirements hence the comments above about having letters of introduction from your employer and your current bank.

WRITING A CHEQUE

The following advice on how to write a cheque supports the information provided by the British Bankers Association.

Cheque

A cheque book usually contains 25 or 30 cheques plus a number of Bank Giro Credit slips for paying money into your account. Cheques are usually 'crossed' with // across the cheque and A/C Payee printed between the crossed line. This means that the cheque can only be paid through a bank account (i.e. not cashed at the counter, except by the account holder in person).

Cheques are numbered sequentially and are printed with a Cheque Number, a Sort Code, and an Account Number.

  • The Cheque Number is printed on the left of the bottom line.
  • The Sort Code is a 6 digit number in the format 12-34-56 and is printed in two places, the top right corner and also on the bottom line of the cheque between the cheque number and the account number. The Sort Code identifies the Bank and the bank branch.
  • The Account Number is usually an 8 digit number and is printed on the bottom line of the cheque to the right of the Sort Code.
Important points to be remembered when writing a cheque

Date: Top right of your cheque

  • Date format - any format can be used to write the current date. Examples:- dd/mm/yy, 20th June 2016, June 20th 2016.
  • The USA format of mm/dd/yy is rarely used in the UK and can be misinterpreted. For example, 5/9/16 in the USA is May 9th 2016 but in the UK it is 5th Sept 2016.
  • You can give a future date for a post-dated cheque.

Payable to:

  • In the line headed 'Pay' write the name of the company or the person who is receiving the cheque.
  • Write the name of the person to whom you are paying after the word 'Pay' as close to the left-hand side of the cheque as you can. If space remains, draw a line through the space so that no new words can be added.

Amount:

  • The amount must be written in numbers and words. If space remains put a line through the space. This means that no one can alter the amount of the cheque after you have signed it.
  • The amount is written in numbers in the box centre right. The £ sign is usually pre-printed. The format for writing a cheque for £25 and 50 pence for example is £25-50. For £25 it is £25-00. Always ensure that the pence amount is included even when the amount is for whole pounds. Do not leave gaps between the numbers otherwise £25 can easily be changed to £250.
  • The amount must also be written in words in the two lines immediately below the line headed 'Pay', where you have written the name of the company or person who is receiving the cheque. Do not leave gaps between the words (Six Pounds can easily be changed to SixtyPounds). e.g. TwentyFivePoundsand50p. TwentyFivePoundsOnly (the ONLY indicates that the amount is in whole pounds and that there are no pence)
  • A/C Payee will be pre-printed between vertical crossed lines and indicates that the cheque can only be paid into the account of the named person or company.

Signature:

  • Write your signature at the lower right of the cheque.

Endorsement:

  • If you are writing a cheque in a store it will need to be endorsed on the reverse of the cheque with the number of your Cheque Guarantee Card, i.e. your ATM/Debit card. They will do this for you. Be aware that many stores and petrol filling stations no longer accept cheques.
  • You may also be asked to write your name and address on the reverse of the cheque, although this is not a secure guarantee of payment as the address given could be false.
Keep a Record

Note the cheque number, date, amount and the payee in the cheque ledger given at the front of the cheque book.

ATM / Cash Cards & Debit Cards

You will normally be issued with a cash card and cheque book for each account that you open. Cash/ATM cards allow you to withdraw up to £250 per day (sometimes more) from cash machines (ATMs). Additional cards for other family members whose name is on the account can also be issued.

This is a usually a free service when you use an ATM belonging to a major bank. Some cash machines, especially those in small shops, may make a charge of about £1.50. You will be informed of the charge before you complete your transaction if you wish to proceed.

Other banking services are also provided at these machines such as obtaining an account balance or statement, paying bills and depositing money, and topping up your mobile phone.

Debit Cards

Most Cash/ATM cards are also debit cards and are accepted by most retailers for payment. Some smaller retailers, though, refuse to accept debit cards or even credit cards for amounts under £10 and some will only accept cash or cheque. This is because of the high level of commission charged by the banks.

Cash Back

Larger retailers, such as supermarkets, offer a 'cash back' service when paying your shopping bill with a debit card. This enables you to obtain up to £50 cash from the till which is added to your supermarket bill and charged to your bank account. This is a convenient service in lieu of a visit to an ATM.

Debit cards are also used as cheque guarantee cards, usually up to a limit of £100. When you present your cheque with the card to a retailer, the retailer will write the card number on the back of the cheque. The bank guarantees payment of the cheque, up to the amount printed on the card. This system operates throughout the UK and enables retailers to accept "out of town" cheques without concern. However, be aware that cheques are generally going out of favour and many shops and petrol filling stations no longer accept them.

Credit & Charge Cards

If you are bombarded with marketing mail shots in your own country enticing you to sign up for yet another card you'll find that the UK is no different.

You have a choice of either credit cards (spend up to your credit limit, and pay back all or part each month), or charge cards (spend as you wish, but pay it all back each month).

Many companies use either Visa or MasterCard (or even both) and offer low or even interest free rates for an initial introductory period and for balances transferred from other credit cards. Once the introductory period ends annual interest rates will then vary between 11% and 20% interest for unpaid balances.

Card companies also offer a variety of products and services which you may find useful.

Annual charges for the privilege of having a credit card have all but disappeared, Barclaycard is one of the few who still charge £10. Charge cards, and some gold cards, still carry annual service fees.

Moneysupermarket.com is a useful site for comparing available credit and charge cards
www.moneysupermarket.com/credit-cards

Store Cards

Most major department and chain stores offer their own credit cards (Store cards). Their annual interest rates for unpaid balances are often as high as 30% but they do occasionally offer 5% or 10% discount on their goods if you use their store card.

Lost or Stolen Cards

We all seem to collect a number of debit, credit and store cards. If any are lost or stolen the card companies will need to be informed immediately. All card types are covered, not just credit cards.

For around £10 per year you can register your cards with a card protection company such as Card Protection Plan.

www.cpp.co.uk

They have a 24 hour number to call and they will contact each of your card issuers for you to ensure all of your lost or stolen cards are cancelled within seconds and order replacements for you.

Savings Accounts

Competition for savings has never been greater. The options available are wide ranging.

Cash ISA - (Individual Savings Accounts). Interest on these accounts is tax free and you do not have to declare the interest on your annual tax return. You can invest a maximum of £15,240 per year and expect an interest rate of about 6% which will vary according to the bank rate set by the Bank of England. The investment can be made as one lump sum or by regular payments. You can compare available ISAs on moneysupermarket.
www.moneysupermarket.com/investments/isas

High Interest savings accounts

High Interest savings accounts are offered by all banks and building societies. Many are 'instant access' and many are 'notice' accounts where 30, 60 or even 90 days notice is required for withdrawals to avoid incurring penalties on your interest. The accounts offering the highest interest are often Internet accounts. You can compare available accounts on moneysupermarket.
www.moneysupermarket.com/savings

Offshore savings accounts

As an expatriate you may be eligible for an Offshore savings account. If you decide to use the expatriate banking services of Citibank or NatWest they will be able to offer you more advice. You can compare available accounts on moneysupermarket.
www.moneysupermarket.com/savings/offshore-accounts

The Relocation Bureau can also recommend an independent advisor.

Enquire

Building Your UK Credit Rating

Why Bother?

Even if you don't intend to borrow any money whilst in the UK, your credit reference file is used for all sorts of purposes by UK companies.

For example, if you want to subscribe to SKY satellite TV, note that SKY will check your credit file to check that you're listed as living at the subscription address, and have no known bad debts, before accepting the subscription application.

More importantly, if you're intending to take a tenancy of a residential property yourself, a positive credit check is essential.

It's important to ensure that you are "known" and listed as being "creditworthy"

Credit Reference Agencies

Experian, the UK's largest credit reference agency, is a subsidiary of The Great Universal Stores Plc. and has headquarters in Nottingham. Its US operation is based in Orange, California.
experian.co.uk

Experian provides factual information to businesses - for example banks, building societies, finance houses and major retailers. This, coupled with other information such as details supplied on an application form, helps them determine quickly whether or not the person applying for credit is likely to repay.

The information that Experian's credit reference agency provides to subscribers helps the majority of people to obtain credit quickly and easily.

Countries where Experian have a presence for managing credit ratings and credit reference files are:

  • Argentina
  • Australia
  • Austria
  • Brazil
  • Canada
  • France
  • Germany
  • Hong Kong
  • Ireland
  • Italy
  • Netherlands
  • Portugal
  • South AFrica
  • Spain
  • UK
  • USA

The Experian website in these countries will have advice on 'How to Obtain your Credit Reference File' to enable you to transfer your rating to the UK. Where Experian does not have a presence you will need to to find out and refer to the Credit Reference Agency used by businesses in your country.

You may find Experian's website useful even though it is aimed at UK residents.

Helpful Hints - Jobs To Do
  • Send off for a copy of your UK credit reference file to check that all is accurate and up-to-date and to make sure that no incorrect adverse information is included. The Experian website has details of how to obtain your credit file.
  • Obtain regular credit reference files from your country of residence. It is valuable to monitor the information held by credit reference agencies and to ensure that it shows what you believe to be an up-to-date and accurate reflection of your credit history.
  • Let all lenders with whom you have accounts know your new address as soon as possible (we can provide change of address assistance for clients)
  • Register with your local council for council tax at your new address as soon as possible. (we do this for relocation service clients)
  • Set up your utility accounts at your new address as soon as possible (we do this for relocation service clients)
  • Apply for a credit card through your chosen bank (the fact that you have a credit card should work its way through onto your file)

Internet Banks

Almost all banks in the UK now provide an Internet banking service in addition to all their normal services and products.

Some of the larger UK financial companies have also created Internet only banks under their umbrella. These banks have generally offered higher rates of interest and have been among the most innovative.

Internet Bank Parent Company
Smile Co-operative Bank
Cahoot Abbey
Intelligent Finance Halifax

The Relocation Bureau's suggested bank for Expatriate services, NatWest, also offers comprehensive Internet banking and may be your preferred choice as they make it easier to open an account and also for the international banking facilities that they provide.
www.natwestinternational.com/global

Personal Loans

Personal Loans are available from banks, building societies and credit cards companies. The amount borrowed varies from £500 upwards and is usually repayable over a period of between 6 months and 10 years.

Availability of a personal loan will depend on your credit rating in the UK.

Lenders charge fixed or variable interest rates on the amount borrowed. Fixed rates offer more certainty but can be at a higher rate. As a general guide, it is advisable to compare the Annual Percentage Rate, (A.P.R) of different lenders.

Depending upon your circumstances, Personal Loans can either be secured or unsecured. Secured Personal Loans have your property set against them as security for the amount borrowed. The interest rate on home owner Secured loans tends to be lower than unsecured loans but exercise some caution and look very, very carefully at the small print.

Personal Loans are repayable on a monthly basis at a fixed amount. However, some lenders offer the option of over-payments or under-payments that could assist you with your personal circumstances.

Moneysupermarket has information on Personal Loans and the best deals available for your circumstances.

www.moneysupermarket.com/loans

Mortgages & Building Societies

Mortgages

The home you buy is very likely to be the most expensive item to buy and maintain in your life. It is worth looking carefully so you can ensure that the loan suits your needs and is competitively priced.

Ways of Paying

Repayment - Monthly repayments of capital and interest gradually reduce the debt over the chosen number of years. This method is generally protected by a simple decreasing term assurance policy, which will ensure the repayment of the loan in the event of death.

Interest Only - As the name implies, interest only is funded on the loan. There is no repayment of capital, which remains the same. The debt is repaid by the means of a savings vehicle, commonly an endowment, pension or Individual Savings Account (ISA).

Interest Rate Options

Fixed - The rate charged on the loan remains the same for a specified period. Allows you to work to a budget and plan accordingly. This route usually involves an up-front fee and penalties for part or full repayment of the loan during the fixed rate period. This type of mortgage is useful in a rising interest market.

Capped - A maximum rate is payable for a specified period. If the standard variable rate (the lenders basic rate) falls below the cap the interest rate charge reduces. There is normally an up-front fee and penalties on repayment during the concessionary period are usual. This type of mortgage gives certainty with little hope!

Discounted - A set reduction off the lender's standard variable rate (the lender's basic rate) for a specified period. The rate paid will rise and fall in line with the variable rate. An up-front fee and repayment penalties may apply. Useful if rates are static or falling, to give low repayments initially, but riskier in a rising market.

Bank of England Tracker - This type of mortgage will mimic the rises and falls in the Bank of England rate, usually at a set percentage over the Bank of England rate for a specified period. An up-front fee is normal but there are no penalties for part or full repayment of the loan during the loan period.

Flexible - This type if mortgage is generally set at the standard variable rate, but has flexible options built in. It may, for example, allow overpayments or underpayments, payment holidays, "borrow back" facilities and often a cheque book option. There are low up-front fees and no interest penalties for full or part repayment of the loan. This type of mortgage is useful for the self-employed or "baby breaks".

Building Societies

As mutual companies building societies are often able to offer better deals on savings and mortgage interest rates than banks. This especially applies to some of the biggest, Nationwide, Britannia, Yorkshire, and Coventry.

www.nationwide.co.uk
www.britanniabuildingsociety.co.uk
www.ybs.co.uk
www.coventrybuildingsociety.co.uk

The remaining smaller building societies are not always as competitive on all of their products as they could be but they are always worth considering as their products are regularly under review.

The mortgage rates offered by building societies are often about 1% less than banks, reducing the annual interest by over £450 on a £70,000 mortgage.

Moneysupermarket has information on mortgages and the best mortgage rates available.
www.moneysupermarket.com/mortgages