Should you hang on to your UK bank account?

The confusion over whether or not British expats can keep open a UK bank account is pushing them out of the safety net of the UK’s regulatory authority and compensation scheme, is currently skyrocketing.  We asked you for your experiences on the worrying trend for UK-based banks to ask expats to close their UK accounts. So far your responses indicate that the problem is not as cut and dried as originally thought.

Based on ExpatMoneyChannel research, whether or not an expat can keep open a UK-bank account will very much depend on who you bank you with; how long you have banked with them; whether you retain a UK address and what type of account you have. What’s more, our research shows some banks are taking a lottery-style approach as to whether or not expats can keep their UK bank accounts by applying different rules even to the same customer base.

These are worrying findings as there are many practical reasons why a British expat would need to have a UK bank account. These would include the convenience of receiving state or private pensions, particularly if you are an expat in a country that does not have an arrangement with the UK to pay pensions directly overseas, such as Brazil and United Arab Emirates. In addition, setting up an international account with a UK bank offshore is out of reach for many expats, with an increasing number of international accounts requiring new customers to have a minimum annual salary of £50,000 or savings of £25,000. And while this requirement is sometimes waived, if you are an existing customer, our survey indicates, after a couple of years even these expats are being asked to stump up the extra cash. And when it comes to private pensions, not all companies have the facility to make electronic payments overseas which means for expats living in remote locations where post may be a problem, the safest way to receive pension payments is to set up an overseas electronic transfer arrangements via a UK bank account.

Then there are those expats who may eventually return to the UK and who do not wish to cut financial ties. Indeed, an expat may still have property in the UK that is let out or they may have a mortgage to pay, so having a UK bank account to accept such payments is useful. Finally, there is the pressing question of whether or not an expat with financial ties in the UK wants to be placed outside the safety net of the UK’s regulatory authority and compensation scheme.

Looking forward

In terms of keeping a UK bank account, if you are a longstanding client of a UK bank then it may simply be a question of persuading your bank to allow you to keep your account open. Unfortunately, if you have already closed your UK account then re-opening one may be much more difficult. Below, you’ll find our check list of what you should be thinking about when deciding on your bank account arrangements.

• If you are going to work abroad for a fixed period with the intention of returning to the UK at some point, then it is advisable to keep open a UK account and it should be relatively easy to persuade your bank to allow this.

• If you are retiring abroad then you need to think carefully about how keeping open a UK bank account will be viewed by HMRC. Particularly if you wish to perhaps change your domicile in the future or if you have complicated tax liabilities.

• If you do keep open a UK account then bear in mind you may come up against difficulties receiving gross interest paid on any savings. Ask for form R105, which is the HMRC form required to pay interest gross on your savings. Bear in mind that banks or building societies are under no obligation to accept this form.

• Be careful when using online banking facilities. Some readers have been ‘locked’ out of accounts when using their expat address rather than the UK address online.

• If you have or want to close your UK account then try and open an offshore account offered by a UK-based bank. While it is no guarantee, it is possible that provided you have been a good client, they can assist you in opening a UK account should you want to come back to the UK. Ask about the possibility of this when setting up the offshore account.

• Check that you can waive any large opening balance condition of opening an offshore account with your UK bank and for how long.

• Also, don’t take no as the definitive answer. If you wish to keep open your UK account then perhaps you can reach some compromise by also opening an offshore account with the same bank. Use your powers of persuasion, particularly if you are a longstanding customer!

 

Expat Experiences with Opening a Bank Account

I have a current account, which I have held since I was 16. It was originally a Girobank account, then Alliance & Leicester and I believe it is changing again. I wanted to make a correction to my address in North America where I live. When I called the bank they said that they couldn’t change my address and wanted me to close my account. I explained that I’d had it since I was 16 and it was used to make monthly payments in the UK, and they let me keep it. Why don’t the banks have an ‘expat account’, with e-statements instead of paper, and standard forms to prove that you are a bona-fide expat?”

–  Expat, North America 

 “I kept the same account I had when I was still in the UK and I also have bank accounts in Europe where I live. I have had no problems maintaining an account in the UK, and since the sums involved are small I have no real issues. However, if I needed to deal with substantial sums I feel that I may find it hard to get the information I need. Perhaps the banks should provide better information, either when they refuse to allow expat customers to open an account or in any case when their customers move abroad,”

– Expat, Europe 

  “I didn’t dare tell the bank I was moving as I suspected they might suddenly make me close my account. This would have been a real pain as I do use my account, especially with regard to renting out my house in the UK. I have bank accounts where I live as well now. The main problem with UK banks is that they don’t seem to realise there are so many expats who still need British banking facilities. I have lost count of the number of times I have had to explain that I couldn’t phone the only contact number available, which has tended to be an 0800 or 0845 number. This situation has fortunately improved as many previously unreachable numbers are now connected, but it just shows how blind most banks are. The UK is part of Europe now and has been for some time. Get rid of that island mentality, please!”

– Expat, Europe 

 “We moved to mainland Europe 17 years ago and were told at that time we could keep our Barclays account, which we had used for many years. Shortly after moving here we were forced to move the account to an offshore account in Jersey with a direct debit Visa card. I would like an ordinary credit card,”

– Expat, Europe  

“I have a UK academic pension, part of which has to be paid into a UK bank account. This and the State Pension are subject to UK taxation. When I went overseas I retained my UK bank account. Four or five years’ later, although the address and bank account number remained unchanged, all my affairs are conducted through an amorphous entity in the Midlands. I also have a Jersey bank account. However, I find the charges levied for offshore are higher than in the UK and interest paid on deposits is lower. At the moment, I have no desire to return to the UK but would be very unhappy to lose banking privileges because of my pension situation.”

– Expat, Middle East  

“First Direct allowed us to retain our UK bank accounts (current and savings). Cater Allen allowed me to open a new savings account, since I had been a (business) customer of theirs for several years previously. We own a Buy-to-let property in the UK and the rent received goes into one of the First Direct accounts. We lost money and would now prefer to keep my savings in the UK. I support your efforts to convince UK banks to accept savings from expats. I object to being treated as a money-laundering criminal just because I moved to mainland Europe.”

– Expat, Europe  

“I have a UK bank account. However, I had a problem with my Debit Card & PIN last summer (which my bank admitted was their fault) which now means that on my next UK visit I will be unable to use my card until I have unlocked it at an ATM of my bank which is something I could do without. There should be a way of enabling PIN’s for those of us who live abroad before having to arrive in the UK with loads of money in case of emergency,”

– Expat, Europe  

“I was not asked to close my UK bank account. I left the UK in 2002 so it may be that the rules were different then. I now have accounts with HSBC in both the UK and US, and I have accounts with another local bank in the US. My only gripe is that I have to keep a large chunk of capital in HSBC to derive the benefits of the account I have. This was not such a problem when interest rates were better! However, my pensions are paid directly into my UK bank account from my pension providers in the UK and I can use these facilities to transfer money as I need it directly from my UK to my US bank account. I have enquired of my pension providers as to whether my pensions can be paid directly into my US account, and they tell me they cannot pay directly into my HSBC US account, but can do so via an intermediary such as Citibank, at a cost of about £2.70 per transaction. As I have four pension providers, two of which are very small (one is only about £40 a month) I am choosing to keep it all where it is at the moment,” Expat, North America  

“I have savings with a building society. I haven’t experienced any problems yet with regard to my expat status but I tried to get a bank card and had no luck. I would like better interest rate!”

– Expat, North America  

“I have a UK bank account prior to leaving the UK and receive an armed forces pension. I was not asked to close my account. However the bank does not seem to want to allow me a credit or a debit card tied to my account, which would be useful for when I visit the UK two-three times per year. I do not understand the benefits of offshore, I believe my pension has to be paid into a UK account.”

– Expat, North America  

“I have property, bank accounts and an investment account in the UK, all acquired or opened before I left the UK. I also have an offshore account. No problems in keeping accounts open, but I cannot change it to one paying better interest,”

– Expat, Southern Hemisphere  

“I have current and savings account with Lloyds TSB in the UK. I have had the account for a long time. Lloyds have suggested I open an offshore account, but as this involves massive fees I have ignored it and continued using my UK based accounts,”

–  Expat, Southern Hemisphere  

“I have various bank accounts and building society bonds in the UK. Have not had a problem with HSBC but Northern Rock compulsorily repaid our 5 year bond as soon as they were notified of our expat residence. I would much prefer to remain entirely onshore. I feel very unwanted despite deciding to leave my life time savings in sterling pending eventual return to the UK. Offshore rates are lower too,”

– Expat, Southern Hemisphere  

“I tried to reopen an account in the UK, but was told it was not possible at every bank. Yet online it appears UK bank accounts are open to anyone for a price,”

– Expat, Europe  

“I have pensions and income from stock/investments and have retained several accounts with different banks for safety (i.e. hedged my bets). I have had few problems with banks, except when they request documentation through the post which takes about a week each direction. However, building society refused to allow us to open any new accounts and therefore existing account lost competitiveness and I eventually closed it. We still retained a UK address for a while so were able to supply appropriate bills etc to prove new address when we felt settled enough to change our address to our new expat home.

The UK banks also were able to open matching accounts in our expat location with fast transfer facilities. Also later as gained confidence went offshore with some savings.

However, NatWest has refused me an offshore account because of my location and I have had similar mutterings from Halifax where I already hold accounts, which is worrying. Halifax have said if I close I would not be able to re-join them in the future. I am concerned about the constriction of the offshore market over the last year or so, and particularly with the recent takeover of accounts by Santander. Some hold separate licenses still but if they amalgamate under one Santander license that will cause problems. Lloyds/HBOS is also integrating/restructuring offshore. All this is taking competition out of the market. Know Your Customer rules are becoming ever more invasive and the opening documentation rules a minefield, varying with each organisation. I would like to go offshore with full international banking but, generally, with the exception of the odd headliner, the rates and terms are lousy. Thank goodness for the Internet – without internet banking it would all be a nightmare!”

– Expat, Southern Hemisphere  

“I have property in the UK which I let out. I don’t have a UK account as despite being a customer of Lloyds TSB for many years they forced me to open an account with their Jersey branch as I was no longer resident in the UK. I only use my account to receive the rent on my flat and to pay my mortgage payments and home insurance. What little is left I spend when I come home on holiday on accommodation, meals and clothes. I certainly cannot afford offshore products and services. The advantages of using an offshore centre are for high earners to avoid tax, not for people like me. The disadvantage for me is the fear that the Government where I live in Europe assumes that people with offshore accounts have them to avoid tax liabilities will chase me up just because my name appears. It will then be up to me to prove that my income is in fact low and I am not a tax avoider, which could cost me a lot in lawyer’s fees, time and worry.” –

Expat, Europe.

“I have a UK bank account. However, when I informed my banks that we were moving abroad I was told that we had to have a UK address. So I changed my contact details and now use my daughter’s address. However, I would prefer to use my overseas address and have access to a savings account. My current UK bank won’t allow me to open a new savings account unless I can prove I am resident in the UK.”

– Expat, Europe.

“I had no problems retaining bank accounts, but was asked to close my building society account. One poor experience with HSBC, after being encouraged to sign-up to an offshore bank account they then had a hefty increase in bank fees unless you had savings over a certain amount – given the inconvenience of opening these type of bank accounts it was a real pain as I had to change things around.”

– Expat, Far East

“I have bank accounts in UK with 2 separate banks. One bank is not aware I have moved abroad, as I think they will ask me to close the account which I do not want to do as I will probably return to the UK at some point. The other bank does not have a problem with me being abroad, but will not let me open a savings account with them despite having held a current account with them for many years. The main problem I would like addressed, is how someone who is temporarily working abroad can open a new bank account in UK. Banks want proof of address (electoral register), utility bills, etc. but as my UK house is rented out I am not able to provide these. I am building up significantly more than the £50K protected under the UK Government scheme, but cannot move any surplus over £50k to another bank as I cannot provide the anti-money laundering bits and pieces they require. My only option seems to be an offshore account, but I would be happier with a UK based account.” Expat, Caribbean

“My UK bank was happy to switch my address to France. However, if I had known that it would mean not being able to take out savings bonds I wouldn’t have bothered. Now we cannot upgrade or move our accounts to take advantage of improved rates. I’ve looked at offshore banking, and it seems geared towards people with far more money to invest that we have. We don’t currently pay charges for our accounts in the UK, and now that we are retired we don’t have the sort of income that merits that kind of account. I want to be able to interact with my bank in exactly the same way as I did when I lived in the UK. Nothing has changed except my address. I live within the EU for goodness sake! The Know Your Customer rules are being taken to extreme. My bank should know me by now – I’ve banked with them for years. I would also be more than happy for them to check my accounts for signs of dodgy dealings – which they do anyway!! There’s no good reason why expats within the EU should be blocked from normal banking practices.”

– Expat, Europe 

 “I have several UK bank account. For two of them I have given a contact address in the UK. For the third, this was opened for me by my bank in the Far East, using my expat address.”

– Expat, Far East  

“I had a current account with Midland (now HSBC) since my youth but whilst working abroad they suggested I open another current account at Midland Offshore (now HSBC International) in Jersey. Didn’t think I needed two so eventually closed the UK account. Unfortunately HSBC Jersey recently imposed a a very high minimum balance which I was unable to maintain so I tried to reopen my account at HSBC in London. An impossible task. They claim, on the BBA website, to facilitate opening accounts in the UK, but this is not the case. All roads lead to HSBC International in Jersey.”

– Expat, Europe  

“We have UK bank accounts and all our pensions are paid in sterling. However, we were forced to close our building society term deposit. Because we cannot open onshore UK accounts anymore, we have to use Isle of Man/Jersey/Guernsey for new term deposits in sterling. This is mostly acceptable but we find very cumbersome. They can be awkward to open, prove identity and operate.”

– Expat, Southern Hemisphere  

“I have a UK bank accounts and bank cards as well as an offshore sterling deposit account. However when I applied for a Caravan Club visa card managed by my bank, I was refused because of not having a UK address, despite my bank having no problem with me living abroad for the past 30 years!”

– Expat, Europe  

“As I have had my account for over 30 years, I persuaded my bank to let me keep it by also opening offshore accounts. I have international accounts in sterling, dollars and euros. I use the online service to transfer where funds are needed. The main problem has always been the poor rates of return compared to those offered on the UK accounts – and not just since the credit crisis and drop in rates. I am not allowed to open any deposit accounts or interest bearing accounts in UK only forced to use the offshore accounts where returns were (and are) always much lower. I tend to use my local banks to get better returns. Basically I use the offshore account for convenience of moving money via internet and keeping an eye on balances when I want. From a practical point of view – flexibility/ internet etc very good – from a financial return basis I think they are poor,”

– Expat, Europe

“I have a current account and statements were sent to my eastern European address but now they are sent by e-mail and I have online banking. However, I have just requested a debit card, so we will see what happens! I have not experienced any problems, but there have been notices on the online banking website that only UK residents can have accounts – although they have certainly not enforced it in my case! However, an insurance company which offered free insurance to account holders wrote to me to say that cover did not apply to me. My main bank account is in eastern Europe where I live,”

–  Expat, Eastern Europe 

“Up until last year I was an expatriate in Hong Kong and South Africa for more than 30 yrs. Retained my UK bank accounts throughout, and I have a buy-to-let property. The Natwest bank sent me a form annually to confirm my non-res status, and Inland Revenue taxed me on the property income plus any interest gained on the UK accounts. Know Your Customer regulations had no impact. Always found NatWest to be most helpful.”

– Expat, Europe 

“I receive a UK Government pension and I have a UK bank account with First Direct. When I divorced I contacted the bank to close my account, stating I did not have a UK address. However, they persuaded me to stay with them, they just changed my account to a Visa Direct. I think there are plenty of offshore investment opportunities giving a decent return, without having to rely on the UK. If anything, I was persuaded to stay away from the UK for tax reasons,”

– Expat, Europe  

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