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Overview

Sorting out your banking is going to be one of the important items on your “to do” checklist. Setting up a bank account in the UK as soon as possible is going to make your everyday life easier. The vast majority of banks offer internet banking nowadays. This makes it very easy to manage your bank account across different countries and also when you are away from your home.

 

UK banks

There are several banks in the UK. Some of these also have branches abroad which may help you in setting up your bank account in the UK before you make your move. There are five major banks which dominate the high street. These are, namely, HSBC, LloydsTSB, Barclays, Natwest and Santander. Banking services are also provided by other institutions such as the Post Office and some major supermarket chains (mainly for savings and credit cards). A full list of banks based in the UK can be found on the website of BBA (British Bank Association).

 

How you bank in the UK

In the UK a bank account is identified by two codes:

  • The Account number: this is an 8 digit number that identifies your account
  • The Sort Code: this is a 6 digit number that identifies the bank holding your account
 
When you make or receive payments to or from abroad, it is necessary also to have the following codes:
  • IBAN: this is a long alphanumeric code (varies according to the country where the account is held) that uniquely identifies your account.
  • BIC: this is an alphanumeric code that identifies the bank where your account is held
 
In the UK you are typically issued a “debit card” that allows you to withdraw cash and pay for goods and services in shops and over the internet. You are also issued with a cheque book in order to allow you to issue cheques to pay for goods and services. Cheques are more and more becoming a payment instrument of the past and are less and less utilised to make payments.

Almost every bank will offer you internet banking allowing you to make electronic payments, set-up standing orders (these are recurring payments) and set-up direct debit mandates (these are authorisation to certain companies, such as suppliers of electricity or telephone or gas, to debit your account with their monthly bills).

Expatriates may find it helpful to open an offshore bank account (see below) in order to manage their banking needs.

 

Opening a bank account

Visiting the websites of the various banks you will be able to find the current account that better fits your needs. In the UK banks tend to offer:

  • Bank Accounts: these are regular bank accounts, offering you a debit card, a cheque book, internet banking and the ability to make electronic payments. These accounts are generally free of charge.
  • Premium Bank Accounts: these offer all the services of a Bank Account, plus a package of services (such as travel insurance, breakdown cover, etc.). These accounts normally have several levels (silver, gold, platinum, etc.) and attract the payment of a monthly fee that, normally, ranges between £5 and £25 according to the level selected.
  • Private Banking Accounts: these offer the services of a premium bank account plus dedicated investment services. These accounts are normally subject to eligibility criteria and the payment of fees.
  • Offshore Bank Accounts:  these are bank accounts normally held outside the UK that offer the same services of a UK based account plus the possibility of holding money in different currencies (Usd, Eur, etc.). According to your personal circumstances these accounts may not attract tax on interest and capital gains. Moreover these accounts often offer a series of investment opportunities.

Banks will ask to have proof of your ID and address. ID is fairly straightforward because you just need to produce a passport or a national ID. Proof of address, if you have just arrived in the UK, might be more difficult to produce. This is because the UK does not issue national IDs showing your address. Therefore banks, in order to confirm your address, typically ask you to produce a utility bill showing it. If this is a problem, ask your employer to issue a letter confirming your address. Also the estate agent you utilised to rent or buy your property could be an alternative. Finally, it is always a good idea to ask the bank you use in your home country to issue a letter of reference for you where they state for how long you have banked with them and that your banking relationship with them has always been satisfactory. This letter needs to be in English language.

Bank Accounts will normally not pay interest (or pay very little). In order to obtain a proper remuneration for your money you will need to open a savings account.

 

Saving accounts

Saving accounts offer you a better rate for your money. Saving accounts are normally free of charge. You can open an “instant” saving account, which means you will be able to withdraw your money at any time or you may want to open saving accounts that give you a better rate of interest but have restrictions on the withdrawal of money.

A particular type of saving account is a Cash ISA. ISAs are tax free. However there is only a certain amount of money you can pay in every year (currently £5,340).

 

Credit cards

There are a large number of credit card issuers in the UK (banks, financial companies, supermarkets, etc.). The information available on the internet will greatly assist you in selecting a card which fits your needs. In the UK credit cards are issued along with a 4 digit pin code that you need to use every time you buy goods or services.

 

Investing

There are a large number of investment service providers in the UK (banks, investment funds, asset managers, financial advisers, etc.). There are several brokers that will allow you to buy and sell financial instruments or to invest through collective investment funds. There is a very large selection available on the market. Your bank or investment adviser will be able to assist you with this.

A particular type of investment account is an ISA. ISAs are tax free. However there is only a certain amount of money you can pay in every year (currently £10,680).

 
 
 
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Related pages: Foreign Exchange 
 
 
All the information on Expats Plaza is free to view. If after having reviewed the information on Expats Plaza you believe this has been useful to you, please visit the Support Us page.
 
 
This page was last updated on 17.04.2011
 
 
Expats Plaza is the website for the Expatriates living in the UK