Understanding the economy in the United Kingdom
The UK has a highly developed social market and is officially the world’s 5th largest economy. The globalized economy of the UK includes England, Scotland, Wales, and Northern Ireland, with an overall population of 67 million. In 2021 the UK economy recovered, restoring its pre-pandemic GDP; from 2.7 trillion in 2020 to 3.2 trillion in 2022.
The national currency of the UK is Pound Sterling (GBP) and, at the time of writing, 1 GBP is equal to 1.36 USD. The UK’s London Stock Exchange (LSE), founded in 1801, contributes a large percentage of wealth to the country’s GDP: the total market value of all companies trading on the LSE was £3.9 trillion at the end of 2021. The total value of goods traded on the exchange is in the region of $5 trillion.
Generally speaking, the UK imposes strong regulations across the financial services sector with multiple regulatory bodies like the Financial Conduct Authority tasked with supervising banks and financial institutions across the country. Customers using money transfer companies can rest assured that the financial systems and governing bodies in place in the UK will ensure a smooth and secure transaction from sender to recipient.
How to set up a money transfer to the UK
We understand it can be tricky figuring out the best way of sending money to expats in the UK and in this section we will run through the different options available, as well as practice advice for how to make a safe and efficient overseas payment.
Ways to send and receive money to the UK
There are many money transfer methods available to senders wishing to transfer funds to the UK. However, the sheer range of options can prove overwhelming to those who are not familiar with the process of sending money across borders.
The best ways to send money to the United Kingdom include:
Bank transfers: Sending money through the UK banking system is popular but comes with a few drawbacks. Firstly, the turnaround time of these payments can range from 2 - 7 business days, a much slower speed than the services offered by specialist transfer companies. Secondly, the average fee per transfer can range from $20 - $50 and this is not competitive when compared to other options.
Balance transfers: One of the best ways to send money to the UK is through a balance transfer; these are quick and affordable and offered by many specialist transfer providers, including Wise. It is important to note that the recipient must also have an account with the same company to receive funds in a timely and inexpensive manner.
Cask pickup: A cash transfer can be issued so the recipient will be able to physically collect money from a nearby location. Ideally, the chosen service will offer multiple local pick-up points for the recipient, so they can choose to collect the funds from somewhere close by. Cash pickup transfers are usually available immediately after the sender initiates the transfer.
Card payments: Sending money to the UK using a credit or debit card is easy for most people. However, the drawback for using a credit card is the potential for extra charges of 1.5 - 3% as standard. Popular card brands VISA and MasterCard offer additional transactional security steps to keep money safe, making them a popular option with many customers.
Home delivery: The sender can initiate a transfer whereby cash will be sent to the recipient’s address and this method only requires the name and address of the person, as well as the transfer amount.
How to send money to the UK
Next, we will outline the different ways in which it is possible to send money to the UK. Readers should note that this list is an example of the possible choices and there may be other available options.
Account top up: Sending money with a balance transfer requires the sender to add funds to their online account. This can be achieved using payment methods like a debit or credit card, as well as bank transfers. Topping up your account can be an automated process if the payment method is added to your account. Balance transfers are a fast and cheap way of sending money to expats in the UK.
Mobile app: It is possible to download a mobile app on your phone which can be used for money transfers sent to the UK. First, check if the money transfer service you wish to use offers mobile services, then visit the Google Play or App Store to check if the app is available to download in your country. If it is, download the app and log in using the same credentials as your online account; you may be required to set up additional security steps such as fingerprint and biometrics at this stage.
Phone call: Senders who do not have access to the internet can make a secure money transfer to the UK, over the phone. In the interest of saving time, be prepared to verify your identity with personal information as well as details for your recipient.
What is needed to send money to the UK?
To successfully send money to a recipient in the UK, from another country, you will need to gather their personal details. The type of details you need to request from your recipient will depend on the transfer method.
When initiating a bank transfer you will be able to review the fields that require information; this includes, but is not limited to, bank account number, bank name, recipient name, total sending amount, and SWIFT code. SWIFT/BIC codes will only be required when sending a SWIFT transfer.
Home delivery and cash pickup transfers require fewer details but you will need to share the recipient's name and address for home deliveries. Some services will provide a transaction number that can be shared with the recipient.
To simplify the process of sending money to the UK, consider using balance transfers, an ideal option for people who do not have a bank account. It is possible to set this method up so only the recipient’s email address is required.
Wise is an example of a service provider that offers balance transfers which can be facilitated simply by using the recipient’s email and these details can be saved for future use. For super-quick transfers, security steps can be removed to speed up sending money to a trusted person to make the process even faster.
More guides for sending money to the UK
How to receive money in the UK
In this section, we share the details that you need to know for receiving money in the UK. These choices provide enough variety to allow all recipients to find a suitable method.
Money transfer service: Arguably the best way of receiving money from abroad is by using a money transfer service. They usually offer better FX rates, faster transfer times, and low fees. The lower overheads of these services mean they provide a much better deal than banks. You can start by checking out specialist transfer providers like WorldRemit, Wise, XE, Currencyfair, Currencies Direct, Key Currency, Instarem and TorFX.
Pickup location: Recipients without access to the internet or bank account can get cash from a pick up location. The sender may share the specific pickup location, or you can go to a branch of your choosing. Also, you may need to provide the transaction number and personal photo ID.
Home delivery: Some services will deliver cash straight to your home. You will need to provide your name and address to the sender. No more details are required, which is an advantage of this transfer method. Make sure to have your identification documents ready for when the cash delivery employee arrives at your door.
Bank account: You must provide the sender with your bank account details to receive money straight into your account. You will need to wait around 2-7 business days for the funds to arrive. The waiting time depends on the sender’s currency and country. Most banks profit when converting currencies because they do not match the mid market rate.
Mobile app: You can sign up for an account with a money transfer service using a mobile app. Download the app on Google Play or App Store and provide your account details to the sender.
What is needed to receive money in the UK?
To receive money in the UK you need to provide your personal details, which differ depending on the transfer method. If you wish to receive funds via bank transfer, then you will need to provide your bank name, account numbers, SWIFT code, bank address, and personal name. You can also specify the currency you would like to receive.
When receiving cash transfers you need to provide fewer details to the sender. Your name is enough for cash pickup transfers and your address is required for home delivery. You may also need to share the transaction number when collecting cash. Personal identification documents are also required to prove your identity.
You should keep a record of all transactions so you can disclose the transfer when filing taxes in the UK with HMRC (HM Revenue & Customs). You do not need to pay taxes if you are receiving a gift transfer. However, if the received money is for income or profits from a business, then taxation is applied.
You should hire the services of a tax accountant to help you figure out what transfers are liable for tax and the amount you need to pay. However, familiarising yourself with the different transfer reasons that require tax also helps. You can learn more about taxes for different transfer scenarios in the next section.
Things to consider when sending money to the UK
There are many reasons why you might send money to the UK. Each one comes with different considerations that should be top of mind. This section helps you navigate various transfer types to help you save money, time and understand the tax implications.
Sending money to expats in the UK is easier now than ever before with many money transfer services out there. To avoid legal issues and save money on fees, you should know a few things before sending money.
Cost: Reducing fees should be one of the priorities when sending money to an expat. Choosing a competitive money transfer service will allow you to get perks such as competitive FX rates and low fees. Also, there is a choice of transfer methods, which means you can choose one with a lower cost.
Convenience: There are many ways that expats can receive money from abroad. This includes balance transfers, bank transfer, cash pick up and home delivery. Ask the recipient what method they have access to since not all expats may have a bank account in the UK.
Tax: When sending money to expats as a gift transfer, there is no need to pay taxes. However, taxes must be paid if the money is for work done or profit on their personal assets.
Weddings in the United Kingdom can be expensive since there are so many amazing locations to book. If you would like to make a financial contribution to the wedding, then here is what you should know:
Transfer speed: Ideally, you should pick a fast transfer method because planning weddings takes time. Booking the venue and catering company in advance ensures the couple can get the dates they want. Balance transfers are usually the fastest way of sending money that are offered by services like Wise.
Taxes: Money transfers to pay for a wedding can be considered a gift transfer. Therefore, no taxes will be applied to the money received. However, if the funds are then used to invest in real estate or a business, then taxation will come into play. The money must be used for the wedding to avoid paying taxes.
FX rates: To avoid losing money on poor currency conversion rates find a money transfer company that matches the mid market rate.
Buying real estate
Sending money to the UK to buy real estate can be done with money transfer companies. The transfer amounts are typically big so you need to keep a few things in mind to save money.
Cost: Look for a fee structure that has a fixed cost instead of a percentage based one. It means that for large transfers you can get away with a small fee, instead of it ballooning with the transfer size.
FX rates: When sending money abroad to buy real estate in the UK, you may need to convert currencies. Therefore, choose a money transfer service that matches the mid market rate. Companies like Instarem provide this service so you will get the best rates.
Transfer speed: You may need the funds to arrive quickly to pay for the deposit and ultimately the real estate property. Specialist transfer companies offer various payment methods, so you can pick one that is fast and has the right fee structure.
Many expats living in the UK receive money from abroad for completed work. Read on for the best way to send money to yourself to save money and time. Also, we cover the legalities of receiving money from abroad as a salary.
Taxes: Expats living in the UK that have residency status will need to pay taxes on income received from abroad. Non-residents may not incur taxes. It depends on the tax treaty with the country where the money is coming from and other transaction details. Hiring a tax accountant ensures that you will not run into legal trouble.
Transfer size: Choose a money transfer company with high limits. This ensures that you can send your entire salary without having a problem with limits. Note the daily, weekly, monthly and annual limits. They should match your expected salary.
Fees: Find a competitive transfer service to avoid losing a large portion of your income on fees. Companies like Instarem have a fee structure of 0.25-1%, which is competitive compared to most other services.
Expats living in the UK may have business income that arrives from abroad. You should be aware of the following details to ensure funds arrive on time:
Transfer speed: Receiving business funds fast may be required to avoid cash flow issues. Balance transfers usually offer instant processing times. The top money transfer companies offer enough options to find a fast processing time.
Taxes: Expats living in the UK may need to pay for taxes on business income. It depends on the residency status of the recipient and if taxes are already paid in the sender's country.
Transfer limits: You may experience business growth and need a reliable transfer service that can accommodate your needs. Therefore, choose a transfer service that has high limits. Companies like VertoFX offer mass international payment for business and a dedicated account manager that provides support.
Expats that have moved to the UK to retire may want to receive their pension. This section outlines what you need to know to receive pension money:
Fees: Choose a service that has a competitive fee structure. Also, a company that matches the mid market rate is perfect if you need to convert currencies during a transfer.
Transfer speed: You may want to receive your fund quickly if the pension money is the means of living. Find money transfer services that reliably deliver funds on time.
Choice: There are many transfer methods you can use when receiving money in the UK. You can opt for bank transfer, specialist transfer service, cash pickup, home delivery and much more.
Benefits of using money transfers companies
We understand that you might be using a money transfer company for the first time and want to learn more about how they differ from traditional banking methods. Among the multiple advantages included:
Faster transfer speed: Many money transfer companies offer balance transfers. These allow you to use the digital account to instantly send money to another user of the same company.
Currency exchange: Many services choose not to make a profit for currency exchange services. It means you will get the mid market rate that cannot be beaten elsewhere. For example, services like Xe, Wise and VertoFx offer competitive rates.
Lower fees: You can enjoy free money transfers to the UK with some specialist companies. They make a profit from charging a small FX markup percentage. If you do not convert currencies, then this negative will not affect you. TorFx is an example of a service that does not charge transfer fees.
Payment options: Most money transfer companies offer multiple ways of sending money and withdrawing from the digital account. This flexibility opens up the services to more use cases.
Worldwide coverage: You may want to send money to the UK from many countries around the world. Specialist transfer providers usually offer 150-200+ countries in their global network.