Taking advantage of favorable exchange rates

[Deleted User]

I'm not sure if this is strictly a savings and investment question, but as it potentially involves saving in foreign banks I guess this is the best place for it.

I run an internet based business and sell primarily in the US. All goods are sold in US dollars regardless of where the customer is in the world. A third party payment processor handles all the sales and wires the proceeds (less their cut) to my bank account once a month.

The weaker the pound is against the dollar on the day that my money is transferred the more money I make. Currently I'm earning quite a lot more than normal simply because the value of the pound has dropped against the US dollar.

Now in theory it would make sense to open a bank account in America and have all proceeds from sales wired to that account. I could then transfer the money to a UK bank when exchange rates are most favorable.

Our business is low maintenance and has virtually no overheads - we don't need the monthly income, and could in fact live for quite some time on money from other sources if it made financial sense to do so. I can think of lots of risks, drawbacks and hassles, but just wondered if someone in a similar situation had tried this or even looked into it in more depth? Maybe it's not as complex and risky as I think?

Oh, and has anyone any idea what the predictions are (if indeed predictions have been made) for the strength of the pound against the US dollar?

mrposhman

Its a good idea to try it. I have money over there and will make money on having it there (was there for a deposit for a house purchase) but I'm bringing it back whilst the £'s weak, it was transferred when the £ is strong so should do well out of it.

Your tax regime would obviously stay the same in that you will have to pay tax in the UK.

I think you might have to check whether this would cause you to become eligible for paying CGT on the amount transferred over as I think holding it over there would seem like you are trying to make the game and not having to transfer as a specific busines transaction though.

Someone with a bit more knowledge of CGT will probably be best placed to advise on this but the idea is a good one and should be quite good for you.

No predictions from me though.

rboltonuk

how do you get it back into sterlign w/o:
a) paying big transaction costs in thje fx
b) trading currency amongst friends and family - always awkard...
cheers

MrExample

Several banks allow you to have accounts in another currency (Citi, HSBC, Abbey, to name a few). I've thought about it before, but never really felt the benefits were compelling enough. If you pay expenses in dollars out of sterling account, or indeed have a lot of money sat around, it could be worth looking into.

Stonehands

I work for a smallish firm (20 people, 4 partners), and our firm has a US bank account.

A lot of our business does come form the states, so its charged in US$, and then paid into that account.

How you go about it, I have no idea, but I know that its defiantly possible.

They then use Travelex to do the exchange into sterling when needed.

Dont know if that helps