How best can I move my Mother's life saving from Spain back to the UK.

Lingstrong

Hi All, Pse help:

My Mother is now joining the hoards of ex-Pats returning from Spain suffering from the weak Euro, she has sold her small house and that money is now her life savings. I live in Cyprus and am wondering what the regulations are with transferring money (circa £25,000).

Q1. Will she be taxed in the UK?

Q2. Will she have to explain where the money has come from to her bank?

Q3. She may want me to hold the money in either my Cypriot acct or my English acct so Q1 & 2 would also apply to me, would I be expected to pay some gains Tax on her money?

Q4. What is the best and safest way of transferring the money from Spain i.e. Swift bank transfer or should I use a private company like HiFix?

Thanks in advance.

nzseries1

This is my personal experience, it's not "the law" but it's what I noticed when I moved a lot of money from NZ to here:

Q1. I can't think of any tax that applies here. I never got taxed on the amount I transferred. It's only subject to capital gains if she transferred the money from here to spain originally, and then transferred it back here at a better exchange rate (i.e. transferred it originally with the intention of profiting from a better rate).

Q2. She may have to explain where the money has come from to Hifx (if she uses them) - I believe it's the responsibility of the company performing the transaction to verify the source of funds. The policy of Hifx is (I think) to check transfers of over £10,000, but I think if you simply stated "life savings" to them they would be happy.

Q3 I can't advise on the Cypriot account, but no if you hold the money for her you won't have to pay tax (well, you won't have to simply pay tax on the transfer). If it's a lot of money the bank may ask where it has come from, yes. In addition, while the money is in your account it's legally yours, your mother will have no legal right to it and also you will have to pay income tax on any interest from the money.

Q4 I like HiFx, and have used them many times. Their rate was good and the opinion on these forums seems to be that if you're transferring over £5,000 you'll get a good rate.

Hope that helps a bit.

D1zzy

We transferred my Mothers money using Currencies Direct - they had an office in her town in Spain so it was easy and much cheaper than using a bank. There was no problem with the banks at either end and no tax to pay , though she had paid up all the usual "living/property" taxes due in Spain.

If the money goes into your account here and you earn interest on it, you will be liable for the normal 20% tax (40% if you are a higher rate tax payer) on the interest

Lingstrong

Thanks very much for your help.

markbodega

Lingstrong

Just to re-iterate a few points:

Q1 - As NZ series says, the money you transfer itself will not be liable to tax however as it's the proceeds of a property sale, no doubt HM Revenue & Customs will look at Capital Gains and whether CGT applies. Best check with an expert though!

Q2 - We (HiFX) do not need to know 'where the money has come from' i.e the proceeds of a house sale etc. The checks we and other currency specialists run are to prove you are who you say you are in line with anti-money laundering rules and regulations. We do ask the reason for transfer, but this is purely to ascertain which money transfer options are available to you i.e do you want to fix the exchange rate for 12 months, is this part of a regular transfer, do you have access to some or all of the funds etc.

Q3 - Although I'm no tax expert, again I agree with NZseries. In the UK the only tax you'll have to pay will be on any interest earned whilst the money is in your account and this will be deducted at source. Suggest you double check this though.

Q4 - Shop around and don't just use your bank whether a Spanish one of one here in the UK. Call your bank and compare the exchange rates offered with those of a currency specialist. Make sure you ask both companies about bank charges as these can mount up. Also when doing the rate comparison make sure you do them one after the other as exchange rates can move quickly.

When choosing a currency specialist, make sure they're authorised and regulated by the FSA for additional peace of mind. You can do this by going to the FSA's website. Also check that the company operates segregated client accounts. Persoanally if it were me making the transfer, I'd choose one of the larger co's for additional security.

Hope this helps and please don't hestitate to contact me if you have any additional questions.

Best regards

Mark Bodega
Director - HiFX

Lingstrong

Mark,

Many thanks for your advice.

Rgds

Lingstrong