Emigration Help

meatandtwoveg

If you were going abroad to live, I mean emigrating to Australia, I am going and I have a problem. I have a large amount of cash which I want to exchange to Australian dollars when the exchange rate improves in my favour.

Now when I exchange, I will do a forward contract, by this I mean I will tie into an exchange rate on that day to do the exchange at a future date. Now on the day you tie in you must pay 10% down payment, and should the rate move against you anytime in the future, then the Forex Company will ask for a further 10% to cover any losses. By this I mean should you tie in at 2.5:1, then it moves up to 2.7:1.

Now I have two options, leave the money in a UK based onshore account, or move the money offshore to an account like the Nationwide Sterling account.

Now the offshore Nationwide Sterling account has a few benefits, as it is accessible from anywhere in the world, so when the rate hits what you want, you can do a CHAPS from the offshore account to the Forex account while living in Australia, you do not ever need to return to the UK. You receive the interest Gross free of UK tax, so pay the tax owed to the Australian Tax man. You can receive the interest monthly. The rate is not great, also should the bank go under you are not very well protected.

The onshore UK home based option has a few flaws. To help maximise monthly interest, you need three accounts as I see it, a fixed rate bond with a maturity date no longer than twelve months, as this is the longest period you can do a forward contract, and you will need access to this cash eventually. An instant access account to hold you initial 10% down payment when the exchange rate hits your favourable rate. An ISA holding the other emergency 10% money should the exchange rate move against you after you have done the deal. Now you will be taxed at 20% on the interest, but you will be able to claim your personal allowance at the end of the tax year, and then pay the remainder to the Australian tax man. The interest will be paid monthly, so accessible in Australia. The problem arises when you want to do the deal, exchange the cash while living in Australia.

The onshore option requires you to CHAPS the first 10% when doing the deal. For this to work I either have to return to the UK, for one week to initiate the CHAPS transfers, .i.e. do all the paperwork, or find accounts where you can initiate CHAPS transfers over the phone or over the internet. I am currently with the Nationwide Building Society, to do a CHAPS you have to fill out a form then show ID at the branch, you cannot do it over the internet. If we are talking large sums here, then we are talking three CHAPS transfers from UK based accounts, while living the other side of the world.

What would you do, any advice appreciated.

mrposhman

meatandtwoveg wrote: »

If you were going abroad to live, I mean emigrating to Australia, I am going and I have a problem. I have a large amount of cash which I want to exchange to Australian dollars when the exchange rate improves in my favour.

Now when I exchange, I will do a forward contract, by this I mean I will tie into an exchange rate on that day to do the exchange at a future date. Now on the day you tie in you must pay 10% down payment, and should the rate move against you anytime in the future, then the Forex Company will ask for a further 10% to cover any losses. By this I mean should you tie in at 2.5:1, then it moves up to 2.7:1.

Now I have two options, leave the money in a UK based onshore account, or move the money offshore to an account like the Nationwide Sterling account.

Now the offshore Nationwide Sterling account has a few benefits, as it is accessible from anywhere in the world, so when the rate hits what you want, you can do a CHAPS from the offshore account to the Forex account while living in Australia, you do not ever need to return to the UK. You receive the interest Gross free of UK tax, so pay the tax owed to the Australian Tax man. You can receive the interest monthly. The rate is not great, also should the bank go under you are not very well protected.

The onshore UK home based option has a few flaws. To help maximise monthly interest, you need three accounts as I see it, a fixed rate bond with a maturity date no longer than twelve months, as this is the longest period you can do a forward contract, and you will need access to this cash eventually. An instant access account to hold you initial 10% down payment when the exchange rate hits your favourable rate. An ISA holding the other emergency 10% money should the exchange rate move against you after you have done the deal. Now you will be taxed at 20% on the interest, but you will be able to claim your personal allowance at the end of the tax year, and then pay the remainder to the Australian tax man. The interest will be paid monthly, so accessible in Australia. The problem arises when you want to do the deal, exchange the cash while living in Australia.

The onshore option requires you to CHAPS the first 10% when doing the deal. For this to work I either have to return to the UK, for one week to initiate the CHAPS transfers, .i.e. do all the paperwork, or find accounts where you can initiate CHAPS transfers over the phone or over the internet. I am currently with the Nationwide Building Society, to do a CHAPS you have to fill out a form then show ID at the branch, you cannot do it over the internet. If we are talking large sums here, then we are talking three CHAPS transfers from UK based accounts, while living the other side of the world.

What would you do, any advice appreciated.

Why are you making thins so difficult for yourself with forward contracts?

When are you emigrating? Do you have a visa and date and if so, this must mean that you have to have cash in Oz by then I assume?

What do you expect the exchange rate to do over the next year then and how will this affect the forward contract that you want to sign up to?

wriggly

Many foreign exchange services provide up to a week to settle transactions, allowing you to do a BACS transfer, which typically can be initiated online. There is usually a max amount you can transfer, but it may be possible to get your bank to increase this.

Personally I would setup an account with a forex service now, and transfer smaller amounts regularly. The exchange rate from sterling to Aussie is really bad now, compared to the last few years, but with quantitative easing in the UK, there's a possibility it will get even worse.

More transactions of lower value hedges your bets, and you can do them as immediate transactions rather than forward contracts, avoiding the complexities of 10% down.

meatandtwoveg

wriggly wrote: »

Many foreign exchange services provide up to a week to settle transactions, allowing you to do a BACS transfer, which typically can be initiated online. There is usually a max amount you can transfer, but it may be possible to get your bank to increase this.

Personally I would setup an account with a forex service now, and transfer smaller amounts regularly. The exchange rate from sterling to Aussie is really bad now, compared to the last few years, but with quantitative easing in the UK, there's a possibility it will get even worse.

More transactions of lower value hedges your bets, and you can do them as immediate transactions rather than forward contracts, avoiding the complexities of 10% down.

What you say makes sense, i know, the BACS process could be initiated online from Australia, so would make life easier. Its just when the rate hits what i want, but my cash is tied up, i need to call my Forex company up, do the deal, then BACS a large figure to them within say four days. Then when the forward contract is due, again BACS an even larger figure, not sure what the rules are with regards to BACS, and what the amounts are.

The offshore option is easiest, but the rates are poor, and worried about the safety aspect.

Thanks.

BACS

http://www.nationwide.co.uk/search/DisplayArticle.aspx?article=1606

FlexAccount Another Bank, Building Society or Individual outside Nationwide £1 - £10,000 3 working days Payments before 5:00pm normally arrive in 2 working days. Payments confirmed after 5:00pm or at the weekend will take an extra working day.
Please note, although payments normally arrive in 2 working days, some organisations require additional time to process receipts. Please check your bill for information.


CHAPS

http://www.nationwide.co.uk/search/DisplayArticle.aspx?article=1403

select the FlexAccount you want to transfer funds from
choose 'Other Services' from the left hand side of the screen
Under the heading 'Financial Transactions', choose 'Transfer to UK account using CHAPS'
read the alert box and click OK
complete the form on screen, including your FlexAccount number. For help with your account number please follow this link to our article sort code and account number, then sign, print and post the form.
The Nationwide address will show on the printed form.
If the address doesn’t print correctly, it is provided below:
Nationwide Building Society
Banking Services - CHAPS Department
Nationwide House
Pipers Way
Swindon
SN38 3GN

chopperharris

Ever thought if we are talking large money in putting it into aus govt bonds , decent rates and adds to points for emigrating.