exchanging euros to pounds

Cook_County wrote:

Are you domiciled within the UK for tax purposes; if not you should keep the money offshore.

If the money came from a trust set up by a non-UK domiciliary then the money could stay outside of the UK IHT net on your death.

The message here is don't forget to include UK tax planning in however you structure the money or you will give 40% to Gordon Brown at some point...

The currency is your choice, you can hold Swiss Francs, US dollars, GBPounds or whatever you like offshore but it could save you tax to keep it there...

Thanks for your responses so far. I work and have residence in Europe (outside the UK). I have earned nothing in the UK during this tax year and will soon be claiming back tax for the tax year before. I have earned this money in Europe, do I have to worry about paying UK tax just for exchanging it while I am on holiday visiting my family this Christmas?

Given that you are not UK resident (I assume) but expect to be so in the future (I assume) it makes no sense to have money onshore. It makes a great deal of sense of course to have money offshore.

You will of course have to investigate tax rules in the country where you live to see how they treat the foreign currency gain or loss as well as the local tax implications of holding funds offshore.

speaking from personal experience (UK national worked in EU for 8 years), the inland revenue told me that if I was domiciled and resident outside the uK, the only income it was interested in was any generated WITHIN THE UK (I had a house which I rented out). Anything else was up to the tax rules of the country in which I was registered as resident. You have something like a 90 day allowance to be in the UK in any given tax year before they start looking askance at your domicile/residency status. If you have no income which is generated within the UK, then I think even if you're changing several thousand euros this should not affect your position at all.

When transferring euros to pounds I found the most efficient and cheapest method was to load my giro account with euros (well, it worked in the Netherlands anyway!). The giro cashcard could be used to withdraw the money in the UK and it was free to withdraw the money - and at bank exchange rates too, which is a bonus. The only problem was the withdrawal limit of £1000 per day. This was a couple of years ago, mind you, so you may have to investigate whether giro accounts are available in your country of residence (usually from the post office), and what they charge for cash withdrawals abroad.