This guide to personal finance for immigrants is by The Learner from Team Monevator. Come back every Monday for another fresh perspective.
A new adventure? Relocating for work? I recently moved to the UK, too, from Australia. That meant rebooting my financial life.
Moving country is a huge job and so I’ve prepared the following guide on personal finance for immigrants from my own experience of coming to the UK.
I hope it can help to make your transition that bit easier!
Before you leave home
1. Build up your savings ready for the move
However much money you think will be enough, double it.
The UK government guide on coming over with a Tier 5/Youth Mobility visa (a live/work visa for under-30-year olds) suggests you’ll need a minimum of £2,530 in savings.
But there are so many things you wouldn’t imagine you’d need, and the extra stability and security will help when everything is new and changing.
My recommendation is to bring whatever amount you need to make a substantial change of game plan.
For example, you may get here and suddenly discover you aren’t able to find jobs in the field you want to work in. Or, you may fall in love with a beautiful foreigner and want to study a foreign language instead.
Even if you have secured a job in advance, it’s not a bad idea to plan for a change.
In addition, your first few months will be fun (plus a few moments when you’ll want to pull your hair out) so consider a small budget to treat yourself, too.
You’ll also want to have drinks with new housemates, catch up with old friends that live here, and to explore your new surroundings.
2. Have an address – your first accommodation sorted
This is critical. It’ll be pretty much impossible to get or plan anything without first knowing where you’ll be staying.
Whether it’s an AirBnb or a friend’s place or a flat you rent, you need an address to apply for everything, from SIM cards to bank accounts.
I rented a place in advance on a six-month lease. But looking back, I would have been better off staying in temporary accommodation, and taking the time to suss out locations, transport, and to figure out what’s value for money in the UK. (Hint: set the bar low if you’re coming to London).
If you do choose to get permanent accommodation in advance, rental agencies will typically want either proof of income and savings or else ask you to pay three-to-six months upfront and/or to have a guarantor, such as a family member, who will cover you financially and legally if you fall short.
Once you know where you’re staying, help yourself out by choosing to pick up your BRP card (proof of legal immigration status) at a Post Office nearby.
3. Check out your banking options
If you can begin to sort out a bank account in advance, why not?
In the UK, there are retail banks that have physical branches across the UK, and mobile banks where you will only interact via a mobile app.
You can research different current account options via a variety of internet sources, including:
Mobile banks and apps such as Monzo, Starling, and Revolut are popular for their ease of use, low-cost, and efficiency, although some people still value the reputation of traditional banks such as Barclays or Lloyds.
Note that signing up for a mobile bank is done via the bank’s app. Ironically, when you try to download this app via Apple’s App Store, Apple ID might ask you for a local credit card to proceed.
I found myself in this ‘hilarious’ endless loop circumstance where in the end I had to use a housemate’s card details to download the mobile bank’s app – in order to get my own local card!
Whichever bank you pick, keep in mind you will go through some kind of application process where the bank will want to verify your identity.
I suggest giving it a go before your move. However, if they need to see your BRP, you will have to wait until you arrive in the UK!
Some banks will only open a new account with you in-person at a branch. If this is you, book your appointment in advance for when you arrive, after you pick up your BRP card.
This was a surprise for me. In Australia, I was used to being able to walk in and see someone immediately. In the UK, appointments for new accounts can be booked up for weeks in advance, especially in busy periods.
You can research savings accounts using the same services I listed earlier.
Savings accounts tend to require less rigour in their identity checks, so you could very well open one from abroad, provided you have your UK address.
Keep in mind the interest rates for savings accounts in the UK are currently quite low.
4. Learn about pension and investment options in the UK
To have a pension in the UK, you’ll need to have a National Insurance (NI) number, which may have been given to you automatically with the BRP.
If not, don’t fret. You can apply for an NI number online, and visit a centre once you’re in the UK.
There are both workplace and private pensions (for the self-employed and others) available. Check out one of the many online guides for more info.
As for selecting investment platforms and brokers, peruse Monevator’s comprehensive guide.
The UK offers tax-efficient wrappers called Individual Savings Accounts (ISAs) to encourage you to save tax-free. Note that there are strict annual allowances on how much you can put into your ISAs each year.
5. Can you transfer your pension to the UK? How will your investments be affected?
How will moving affect your existing pension and investments? Arrangements between different countries and the UK will differ, so check specific sources to your country.
When in doubt, please seek out an expert financial advisor.
For pensions, if your current country partakes in the Qualified Recognised Overseas Pension Scheme (QROPS), you can potentially look at using QROPS to consolidate your pensions into one plan.
As for your investments, it’ll help to learn about the UK’s tax laws. Expatica has a useful guide to start you off.
After you’ve arrived in Britain
6. Transfer funds into the UK
Once you’ve set up your bank account, you can use low-cost transfer agencies such as Wise to send money internationally to the UK
Typically, you’ll be asked to make a local transfer to a Wise intermediary bank based in your ‘from’ country (Australia in my case), and then be paid from Wise into your new bank account in the UK.
Transfers can happen in a matter of 1-2 days, but I’d plan for one week.
7. Set up your credit profile for success
You’ll need some time to build up a credit profile in the UK.
There are three main credit agencies in the UK – Equifax, Experian, and TransUnion.
The following services are free, and will enable you to check your credit profile across the various agencies:
- Credit Club (Experian)
- ClearScore (Experian)
- Credit Karma (Equifax & TransUnion)
MoneySavingExpert has a good guide on building your credit profile in the UK.
You’ll want to:
- Sign up on the electoral roll.
- Try to minimise the number of credit applications and hard searches on your profile (which can be tough at first when setting up utilities, mobile phone accounts, and so on.)
- If you have been offered credit, keep your credit utilisation low (between 1-20%) and make all minimum payments or pay your card off monthly, in full.
- Take out a credit builder card if you need extra help, such as Aqua.
Monevator has a legacy guide to the best credit cards that covers what to look for – but needs updating on the specifics. (Hint hint!)
8. Embrace open-mindedness and a growth mindset
Now that we’ve got you prepped financially for your new life in the UK, it’s time to enjoy it.
While exciting, coming to a new culture can be tough, so it’s important to stay open-minded and curious about learning about the UK.
Be sure to speak up for yourself, network, and share your own background and culture with love. Nurture your ‘growth mindset’.
Personal finance for immigrants is all part of our adventure
Surprises, twists, and turns will come your way, so stay present in the journey and trust your ability to adapt.
After all, you’re learning and growing.
Oh, and welcome to the UK!
- Further reader: Finances 101 for UK immigrants
Monevator has lots of non-native born readers, so please share your tips and experiences on personal finance for immigrants in the comments below. And do check back for more articles from The Learner.
I have made the same move – welcome! It is much easier to save here purely from a paperwork perspective with ISAs etc.
Good advice above, I prefer OFX for transfers as they support BPAY in Australia. Not a huge difference, depends how much you are moving.
I have friends who opted out of their workplace pension because they were planning to go back in 2-3 years. A big call – see what works for you, but seems sensible to at least take the match offered by your employer, the gains will negate even the worst case tax treatment in future.
Assuming you are planning on travelling recommend you look into… rail cards (discount on rail travel), topcashback (use for a small but decent cash back on hotel bookings / hire cars etc), insurance4carhire (blanket insurance is much cheaper than paying per trip), challenger banks listed above have good deals for travel related forex, and google flights (make sure you look for 2x one way flights not return as often cheaper to split airlines)
Good list, and welcome!
Two quick additions:
1. Easy one – on the credit building side, if you’re able to open an American Express in your home country before leaving, you can use their “Global Card Relationship” to get one in the UK, without any credit history (americanexpress.com/us/customer-service/global-card-relationship). Amex isn’t accepted everywhere in the UK so need a Visa/Mastercard backup (credit or debit), but it helps get the credit file going and is generally useful.
2. Potentially harder one – understand the impact on taxes in your home country. For most countries, this will probably be limited to understanding if you’ll need to keep paying any tax for any accounts left in your home country. For Americans, this is a much bigger effort, due to citizenship-based taxation, so they remain US taxpayers and also become UK taxpayers. The US treatment of seemingly “boring” UK options can be painful and punitive – a global tracker fund in an ISA is a great example of something that is common sense for most people in the UK, but almost certainly a terrible idea for US citizens.
Might want to consider what the likely cost of living will be, bearing in mind council tax, rent, transport and food prices.
I’ve heard it said a lot how things are cheaper back home, and in currency terms I’m sure the wages here look attractive, but some costs are higher as a result of that and currency can give a false impression of what standard of living is attainable, so go into it with eyes wide open.
Much like if I moved from the sticks to London, earn more and pay more, London is so far apart from the rest of the UK it’s like a world class city plonked in an otherwise inconspicuous country.
But we have quite a share of migrants in this ghetto town so some migrants do decide that the economics of not-london UK works out better than London itself.
Long time reader – never commended until this blog.
I (accidentally) ended-up in the UK some 16-17 years ago from Australia. I could write a book on that experience and what I learnt.
A Uni friend who was in the UK at the time came and picked me up from Heathrow and said to me “you may have worked in Sydney & Melbourne but it doesn’t mean jack – to survive in London you have to be harder & more assertive as everyone wants your money”. He wasn’t wrong – being a Outback Country Boy – I wasn’t ready for the million & one scams that seemed to be directed my way and I had to grow-up fast.
I did survive and thrive.
Before I came over to the UK – I did have the foresight to open an expat bank account with HSBC Australia – which allowed me to walk into a branch in the UK and activate the account. It came with a Credit Card if I remember correctly. So I had a working Bank Account and a Credit Card from the day I walked out of Heathrow. Something to look into.
DO NOT lose track of your Australian super & keep up-to-date with ATO tax policies for those with investments/assets in AU but living & working abroad!
I didn’t even give it any thought when I left AU in my early 20s, until 2018-2019 when HMRC decided to demand a tax audit. Obviously, AU and UK had started to share financial data and HMRC knew more about my AU super, old childhood investment accounts etc… than I did!
In the end had to pay for someone in AU to help sort it all out and once the dust had settled found that when I had left AU I had 5 super accounts and a few childhood investment accounts that parents/grandparents had setup and family had forgotten about. Many of the super accounts had been eaten by fees – some had been frozen – others had been handed to the ATO. By not maintaining them – I’d lost tens of thousands. 🙁
Regarding AU Tax – the UK and AU have a double tax agreement. However, it seems that around 2013 the goal posts were moved – so apparently now you need to physically cut the AU residency ties otherwise the ATO still expects tax or tax returns. I never gave it a thought when I left AU to travel the world 16 years ago and never even considered it might be an issue so never troubled myself with reading the ATO website every June. Although, because of the forgotten childhood investment accounts it now seems to be a _BIG_ issue with both the ATO and the associated financial institutions. Therefore, I’m now trying to sort this out remotely which is a PITA as I’d originally planned to sort this when visiting AU early 2020… (everyone knows what happened next) I have no idea what the ATO will demand when I finally sort the mess but I’m expecting it to be expensive! 🙁
Another Aussie in the UK here.
The Learner – you may have made life easier than you realise by having accomodation set up in advance. I was couch surfing when I first arrived in the UK and I remember well that until I had a fixed address I was a Very Suspicious Person and many official things were difficult.
I have a substantial amount of money in an Australian Super scheme and have not really worked out what to do with it. Roger.Wilco you have got me a bit worried. Do I need to declare the Super fund on my UK tax return while still working (ie not drawing anything from the super)? I’d considered it the same as UK pension investments and so not said anything about it on my tax return. I hope I won’t get in trouble with HMRC for that. A really confusing question is whether money drawn from the Super fund in retirement while a UK resident would be taxed by the UK. Even official advice from HMRC on their own Q&A forum is confusing and inconsistent. I suspect I may have to pay for the advice of an expensive tax accountant one day, or risk a massive tax bill. In any case it seems you can’t convert a Super fund to a UK pension ever, or withdraw it before retirement age, so no hurry to do anything.
Aside from the Super I moved my other savings & investments to the UK as I was paying 10% non-resident tax to the Australian government and I could not see any way to avoid that or get it back on my UK tax (though that was nearly 10 years ago and maybe the rules have changed). It also makes my UK tax return a lot simpler having no overseas income.
For money transfer Wise is easy to use and gives decent rates up to few thousand £/$, but if you’re transferring more than that you can get significantly better rates elsewhere. I’ve used Currency Solutions for larger transfers.
@ Eadweard
“seems you can’t convert a Super fund to a UK pension ever, or withdraw it before retirement age, so no hurry to do anything” Yes – this seems to be my and my AU Advisors understanding too.
A bit of a PITA because of the issue that if you don’t keep the Australian Super “active” there are consequences as for some funds the fees are higher if there is no regular payments and if there are no incoming payments almost all Funds will eventually be frozen and maybe given to the ATO. Getting the Super unfrozen and getting the funds from the ATO is doable – but not so easy when abroad.
What I’ve been advised to do – is to put a small amount ($500) into the Super twice a year just so that it still appears “active” and doesn’t get frozen in the future.
When doing HMRC Self Assessments the small amounts paid into the Super are defined as “Pension Payments: Overseas scheme: provider and details”.
By letting the Super accounts get frozen and eaten by fees – I lost tens of thousands in capital and potentially hundreds of thousands over my lifetime.
As getting the Super out of Australia while still an Australian citizen seems impossible – I’m kicking myself that I wasn’t on the ball when the AU Gov’t allowed people to raid their Super at the beginning of the COVID pandemic. I (may) have been able to transfer some of the Super into a Pension or ISA here in the UK.
You guys are so organised.
I arrived with £300 and 4 white shirts, in the middle of winter with no warm clothes; somehow made it work.
My biggest tip – only come over when the economy is booming. If you’re able to secure a job quickly upon arrival everything else tends to fall in place. There’ve been times over the 15 years where I haven’t had as much of a sniff of a role in my field for months and months and months.
Interesting stuff. Lots of peculiarities depending which country you come from. My wife is from an East Asian country which is very officious in nature (like the Vogons) and still actual physical trips with family ink stamps are needed within the country itself (being made challenging by the Global Cabal at the moment of course) to update required details for financial & family matters.
Could you have a guest writer volunteer an article on the reverse – A guide to personal finance for escapees from the UK ?
Think twice before relocating in UK for just few years! You do not get a UK state pension (at age 68+) without at least 10 years NIC (national insurance contribution).
Ex: each worked year you gain 5 £/week (261 £/y) so basicaly 7060 £/life (from 68 to 95 age), indexed with inflation by HMRC. Even if you worked 1o years in UK you acumulated just 2610 £/y, basicaly not-tax in UK (less 12500 £/y in UK, tax is zero). So, 7060(£/life/workyear) is 25% of 28000 £/y UK average salary, left on the UK table.
Just be aware that coming to the UK from the USA is a whole different kettle of fish. US citizens and green-card holders (even if expired but not officially abandoned) remain US taxable no matter where they live. They might also still be taxable by a US state if they have not sufficiently severed ties to break state domicile/residency. In some cases you don’t even need to have lived in the US, because you can acquire US citizenship through a US parent.
The US tax code and elements of the various tax treaties do allow methods to reduce or eliminate double-taxation on the same source of income, but discovering how to actually do it is not straightforward. UK self assessment is a breeze compared to your FBAR, 1040, Sch 1, Sch 3, Sch B, 8949, Sch D, 1116 and/or 2555, 8938, 8812, 8814.
Certain savings and investment products in each country are not necessarily recognised in the “other state”, (e.g. ISAs, Premium Bonds, 529s, HSAs, 25% tax free lump sums on pensions).
Typical planning tools are not necessarily portable and can land you in big trouble (e.g. wills, trusts, powers of attorney). US retirement accounts cannot be transferred to UK ones (forget about QROPS, QNUPS, “Malta-type” offshore pensions. Apart from within a UK pension, non-US mutual funds, ETFs, REITS and investment trusts attract punitive rates of US tax (see PFIC). Non UK/European ETFs/funds are not allowed to be sold to US citizens, even if resident in the UK, unless you have very deep pockets and and either qualify as a professional trader or use a third-party investment adviser to hold US-domiciled funds in a US account).
Every year you need to file both an IRS tax return and an “FBAR” to report all your non-US financial accounts if they exceed fairly low thresholds. This can include joint accounts, children’s accounts, pensions (not pure DB ones prior to distribution), gold trading accounts, pre-paid cards (including currency transfer accounts), etc. Potential fines for failing to report are insane.
Mortgages can cause problems, because the US see them as currency trading. So you could end up paying a “phantom currency gain” for just paying off your GBP mortgage in GBP because the USD/GBP rate has changed since you took out the mortgage.
Many life insurance products should be out-of-bounds, at least anything with an investment element or cash surrender value.
You may be forced to close or suspend further types of trade in your US accounts. You will be prevented from opening a trading account or ISA virtually anywhere due to US citizenship (Hargreaves Lansdown are ok). Even any UK pension providers won’t accept you. The safest bet is an employer-sponsored pension fund, but I know AJ Bell and others allow US citizens to open a SIPP.
When leaving the US, you might want to open a bank account that excepts overseas residents (e.g. SDFCU, the app doesn’t work, but you can scan US cheques to deposit on their website). You also might want to maintain a US mailing address and cell-phone to make keeping or maintaining financial accounts, but you might be breaking the terms of the accounts by not disclosing where you now live.
Last thing you might be thinking about, but popping your clogs “abroad” is not a easy as is sounds. You might need to file for probate in two countries, final tax returns in two countries, estate tax return in the US, IHT forms in the UK…
Finding good tax, or financial planning or advice is extremely difficult or expensive. You cannot rely on a good US CPA or a good UK accountant, you really need someone qualified in both countries. If you want to do it yourself, prepare for a lot of research. Even after research you will find grey areas that even experts disagree on (e.g. fore-mentioned lump sums, trust reporting of pensions, tax treatment of certain government social security benefits, etc).
There is an amnesty program for people that have only just discovered they should have been filing tax returns, but it’s very difficult to put together the back-filing of 3 years’ returns and 6 years’ of FBARs. And it needs to be filed on paper at which point it will disappear into the IRS backlog for months/years.
A great new website that covers a lot of these topics is here: https://fireacrossthepond.com
Good luck!
Another good thing to remember is tax returns. Quite often people arriving (or leaving) will often not be working a full tax year and therefore be eligible for a refund.
Interesting article and thanks for undertaking it! Although I’m one of the UK->elsewhere folk over a decade ago there are a number of parallels and common pitfalls – and of course tax and fiscal law and rules continually evolve.
@BW – yes – just about covered our movement expenses – a little from both countries.
@Algernon – good idea but hopefully covered off on other sites (maybe?). Alternatively if you have a burning desire to import a Triumph Spitfire Mk II in to NZ our experience has just been published in the TSSC’s Courier magazine (July edition).
I hope you’re enjoying life in NZ. I moved to London from Auckland in late 2005.
The tax returns definitely helped my paper thin budget on arrival here when the exchange rate was circa NZD 0.33 : GBP 1.00
Would be great to see similar article for people emigrating from UK for (early) retirement. What are tax implications of such move on pension drawdown? How to claim UK state pension without having UK address anymore, etc.