Campaign for British Expats to keep their UK Bank Account

Initial Findings Revealed 

Survey Highlights:

• There is no legislation that says British expats cannot keep open a UK account
• Banks often reduce banking privileges to expats keeping open a UK account
• Thumbs up to First Direct and HSBC who are tagged as the most expat friendly in our survey*
• Lloyds TSB tagged as the most likely bank in our survey* to ask an expat to close their UK account
• Building societies are least likely to allow British expats to retain UK accounts
• Banks are applying a lottery-style approach to expats wishing to keep open a UK account
• Know Your Customer (KYC) rules are overly cumbersome, inflexible and intrusive
• Offshore accounts are perceived as having high charges and paying poor rates
• There is a general lack of understanding and current fear about banking offshore

 As previously highlighted on ExpatMoneyChannel 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. We asked you for your experiences on the worrying trend for UK-based banks to ask expats to close their UK accounts. Your responses have helped formulate a campaign we plan to take to the UK authorities to seek clarification of the rules in relation to British expats and their UK bank 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, after a couple of years our survey indicates that 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.

The results of our survey so far give us a much clearer picture of how expats are coping with these banking irregularities. In addition, we asked banks and HMRC for their views.

While we have outlined our findings so far below, we will certainly continue to fight on your behalf and push for a better deal for expats, so keep your responses coming and join our campaign.

*Initial findings of our survey taken from 50 respondents in July 2010.

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 that you may come up against difficulties getting 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 rather than 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. That way it is possible that, provided you have been a good client, they may be able to 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 an offshore account.
• Check that you can waive any large opening balance conditions 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!

Also see:

Some of our readers’ experiences of keeping open a UK bank account

A list of countries where you can get state pensions paid overseas plus general guidance on state pensions while abroad

Tax on your pension paid overseas 

Getting your civil service pension paid overseas 

Tips on opening an offshore account