Money & tax

The UK government provides ‘benefits’ (state welfare payments) to people struggling with money, but usually only British Citizens and people with Indefinite Leave to Remain or Settled Status. The main benefit is called Universal Credit.

There are also other types of benefits, specific to certain situations. Be aware it is illegal to lie to claim benefits or to keep extra money if you have been paid too much.

• The independent organisation Citizens Advice can help you discover if you can claim anything.
• Read our blog post to see a list of other places that could give financial help.
• Go to the main government website to see the full range of help you might get.

The government’s Department for Work & Pensions can help explain Universal Credit and what you can claim.

Be aware you must not apply for Universal Credit if your visa says you have No Recourse to Public Funds. This is because it could affect your right to stay in the UK.

• Go to the government’s Universal Credit website.

There are emergency food banks in many communities to help people in crisis who cannot afford food.

You must first get a food bank voucher from a GP (local doctor), social worker, probation officer or school. Emergency food parcels are designed to last at least 3 days and you can usually only get 3 a year.

• See the Trussell Trust website for more information about emergency food, or search online for charities in your local area.

If your visa says ‘no recourse to public funds’ (also called ‘NRPF’) or you’re subject to immigration control, there is little government help available. If you apply for Universal Credit (the main social welfare payment), it could affect your right to stay in the UK.

• One place that might be able to offer advice is the Turn2Us website, a national charity that helps people during difficult times.
• There is also an online tool from the NRPF Network that might give you more information about what is available.
• In Scotland, the charity Positive Action in Housing might be able to help.

State welfare payments or tax credits are known as ‘public funds’. If you have No Recourse to Public Funds in your visa, it means you are not eligible for this kind of financial help.

However, some state welfare payments are not classified as ‘public funds’. These are:

• Contribution-based Jobseeker’s Allowance
• Guardian’s allowance
• Incapacity Benefit
• Contribution-based Employment and Support Allowance (ESA)
• Maternity allowance
• Retirement pension
• Statutory maternity pay
• Statutory sickness pay
• Widow’s benefit and bereavement benefit
• National Health Service (NHS) treatment
• State-funded schooling for children

Be aware that just because they are not classed as ‘public funds’, does not mean you can claim. There might be other reasons why you cannot apply (for example, the rules of your visa).

If you are Subject to Immigration Control (for example, you are in Britain on a visa), but your partner is not, it will affect which types of state welfare payments and tax credits you can try to claim. Payments that are for your partner personally (for example, Disability Living Allowance) should not be affected.

If you are subject to immigration control, it is important to get specialist advice before you apply for state welfare payments or tax credits. If you don’t, it might affect your permission to stay in the UK.

The independent organisation Citizens Advice has immigration specialists and offers free, confidential help.

There are many types of help for disabled people, or people with a long-term illness. If you have a specific disability or illness, there might also be a specific charity that can offer advice or help. Search online.

• You can find out more about financial help on the main government website.

Access to cash is becoming a problem in the UK because many ATMs and local banks have closed.

Most banks offer excellent services online so there is not always a need for a bank in a local area. However, it is a problem if you need to deposit cash or cheques, or if there are no ATMs.

• One option is the Post Office. It offers free basic banking services for its own accounts, as well as a range of high street banks. Services include depositing cheques and cash, withdrawing money and checking your balance. The Post Office website has more details about its banking service.
• You can get ‘cashback’ from supermarkets when you buy something. This means you pay an extra amount on your shopping, and get it back as cash. The maximum is usually £50.

It is possible to order foreign currency online and get it delivered to your home or pick it up in a convenient location. One provider is Travelex.

It is also possible to get UK sterling delivered to your home address in some circumstances. Royal Bank of Scotland is one bank that offers this service.

Anyone with money in a UK-authorised bank, building society or credit union is covered by the Financial Services Compensation Scheme (FSCS). This means that if the bank fails, the FSCS will automatically make sure you get your money back, usually within 7 days (up to £85,000 per person).

There are some conditions, however:

• Each person is only covered up to £85,000 per bank – not per bank account. So if you have a lot of money, you should spread it across several banks.
• Be aware that some banks trade under several names. For example, the Co-operative Bank also trades as Britannia and Smile, but these all count as 1 bank.
• The maximum that can be claimed by people who have a joint account is £85,000 each (so £170,000 in total).

Check that the bank you want to use is regulated by the Financial Conduct Authority (FCA) because some internet-only banks are not regulated. Go to the FCA website to see a list of registered banks.

If you have a very large amount of money, NS&I (National Savings & Investments) is backed by the UK government and will guarantee large amounts of money. Its Direct Saver account will take amounts up to £2 million. Go to the NSI website.

If you need someone to look after your money for you (because you are abroad or in case of illness), you can ask an ‘attorney’ to do it for you. An ‘attorney’ is a trusted person who acts for you. It could be a lawyer, or it could be a relative or friend.

You need a special document, called a Power of Attorney. There are 2 types for financial matters:

1. ‘Ordinary Power of Attorney’. This is a good option for people who need someone else to manage their UK money for them for a short time (for example, because they are abroad). To set up an Ordinary Power of Attorney, speak to a solicitor or use go to Citizens Advice. It can be effective immediately, if needed. Be aware that if your mental state means you cannot make your own decisions, the Ordinary Power of Attorney will not be valid. In Scotland, it is called a General Power of Attorney.
2. ‘Lasting Power of Attorney for Property and Financial Affairs’. This is a more formal and longer-lasting document. It means someone else can make decisions about your finances and property, for example choosing to sell your house. You can choose if the Power of Attorney will be used straight away, or only if you cannot make your own decisions (for example if you get dementia or have a serious accident). To set up a Lasting Power of Attorney, go to the Lasting Power of Attorney website.

For most people, there is a charge of £82. After you and your attorneys have signed your document, you must register it with the Office of the Public Guardian. The Power of Attorney will not be valid if you do not. Be aware that registration could take about 4 months. Read more about Power of Attorney on the main government website.

People in Scotland need to make a ‘Continuing Power of Attorney’. Go to the Public Guardian Scotland website.

• The Citizens Advice website has general information about Powers of Attorney.

Action Fraud is the place to report fraud and cyber crime in England and Wales. You can report at any time of day using its online tool. Go to the Action Fraud website.

For fraud/cyber crime in Scotland, call 101.

For an emergency, call 999.

If you are homeless or don’t have a home address, it might still be possible to get a bank account. The bank HSBC offers a No Fixed Address service for people getting support via certain charities, including the homelessness and housing charity Shelter.

• Read more about the HSBC No Fixed Address service on the HSBC website.

If you don’t have a bank account, it is possible to pay bills or buy things online using a postal order. It works like a cheque, except you don’t need a bank account. Instead, you buy the postal order from the Post Office and send it as your payment. There is a small charge for each postal order. Read more on the Post Office website.

If you don’t have a UK bank account but want to use a contactless debit card, consider getting a Travel Money Card. You can transfer UK Sterling onto the card either from an overseas bank account or as cash, which you can then spend using the card. The Post Office offers a Travel Money card or you can search for other providers online.

There are several ways to get money sent to the UK. Two examples are Western Union and PayPal.

• With Western Union you can receive money in cash from a Western Union outlet. Go to the Western Union website.
• With PayPal you can send it to an email address and use it from an online PayPal account, but this would only work for online shopping or bill paying. Not everywhere will accept it. Go to the PayPal website.

You will need to ask your UK bank for the IBAN (international bank account number) and SWIFT code (or SWIFTBIC as it is sometimes called) so the overseas bank knows where to send the money.

You can find the IBAN on your UK bank statement, or ask your bank. You should be able to find the SWIFT code on your UK bank’s website. The overseas bank will probably charge a fee to send money to the UK.

If you want to avoid paying a banking fee when sending money abroad or receiving it from abroad, there are other options. Services such as Western Union, TransferWise and PayPal are alternative ways to send money. However, it makes sense to compare the exchange rates and fees to those from your bank before making your choice, especially if you are moving a large amount of money.

Go to the websites to read more:

• Western Union
• Transferwise
• Paypal

AER means Annual Equivalent Rate. AER is used when saving money. It will tell you the amount of interest (before tax) you would get on your money over 1 year. This can help you choose the best place for your savings.

There are many different ways to save or invest money in Britain. The Money Advice Service gives information about different types of savings account, including special accounts for school fees, children or which are Sharia-compliant. Go to the Money Advice Service website to read more.

NS&I is National Savings and Investments. With NS&I you are lending to the UK government. The interest rates might be lower than for some other products, but your money is 100% secure. Go to the NSI website to find out more.

An ISA is tax-free savings system promoted by the government. There are different types of ISA. For example, some ISAs are designed to help people save money to buy a home, or for their retirement. Others are just for children.

There is a limit on how much you can pay into an ISA each tax year.

Adult ISAs are available to most UK residents aged over 16. You need a National Insurance number.

• Read more about ISAs on the Which? website, an independent organisation.

You might be able to apply for compensation via the Financial Services Compensation Scheme. It covers debt management companies, insurance companies, pension providers, endowment schemes and mortgage/insurance advisors.

• For more information and to apply for compensation, see the FSCS website.

The LSE is the London Stock Exchange.

The FTSE (known as the ‘footsie’) is the name used for the Financial Times Stock Exchange Group. It is an independent organization that creates indexes for financial markets.

The FTSE 100 is Europe’s most popular stock market index. It tracks the 100 most valuable companies (assessed by stock value and liquidity) listed on the London Stock Exchange. The FTSE 100 is often used to judge the prosperity of the UK.

The FTSE 250 is another popular index. It is made of the 250 companies listed after the FTSE 100. These companies often have a less international focus than those in the FTSE 100.

The AIM is the Alternative Investment Market. It is an international market run by the London Stock Exchange. It is designed to help smaller and growing companies raise money from investors.

An IPO is an Intial Public Offering. This is the time when a company first offers shares for the public to buy.

‘Blue chip’ is a phrase used to describe well-known companies with a record of reliable share growth.

The stock market is often described as being ‘bearish’ or ‘bullish’. A Bull Market means the economy is good and investors are optimistic that their stocks will rise in value. In a Bear Market, there is pessimism and a bad economy or a recession.

APR means Annual Percentage Rate. APR is used when borrowing money (for example loans or credit cards). APR includes the interest and charges you will have to pay over 1 year. Lenders must tell you the APR to help you compare each offer.

Credit ratings (also known as credit scores) are used by financial organisations to judge how much of a risk you are.

They are mainly used for credit cards, loans or mortgages, but they are also used by landlords and for car finance deals. This can be a problem if you are new to the country, because your financial history is not known.

• The MOVING TO BRITAIN section has advice if you are finding it difficult to be accepted as a tenant.

The government has a free service that can help you manage your money, called the Money Advice Service. Go to the Money Advice Service website.

There is also a charity called StepChange that can help. It offers free advice and can help arrange debt repayments. Go to the StepChange website.

A CCJ is a County Court Judgment.

You might get a CCJ if someone takes you to court about a debt, but you do not respond. If the court decides you owe the money, they will send you a CCJ saying how much you owe and when you must pay it back.

If you don’t pay within a month, you will have the CCJ for 6 years. This could make it difficult for you to get a loan, credit card or mortgage.

• Read more about County Court Judgments on the main government website.

If you do not think you will ever be able to pay your debts, you can apply for bankruptcy.

Assets you own will be used to pay for your debts, and this might include your home. Household items and work items are usually excluded. Bankruptcy usually means your debts are written off after about 1 year, but credit reference agencies will keep the details for at least 6 years.

It will usually be more difficult and expensive to borrow money in future, which can make it difficult to get credit cards, loans or mortgages.

Bankruptcy is known as ‘sequestration’ in Scotland.

There are many other alternatives to bankruptcy, so make sure you speak to a debt advisor first. The government offers free advice on the Money Advice Service website.

Most UK residents qualify for a British State Pension once they reach State Pension Age (at least 65), as long as they have paid National Insurance for at least 10 years.

The pension is paid by the government and funded by National Insurance contributions.

Because the state pension is fairly small, there is also a large private pension industry. Usually your employer will arrange one for you, but you can also apply independently. There are 3 main types:

• Defined contribution (includes stakeholder pensions, SIPPS, NEST). This is based on how much you have paid into the pension
• Defined benefit (also known as a final salary pension). This is based on what you are earning when you retire, or a career average.
• Cash balance plans. A mix of defined contribution and defined benefit schemes.

Some people prepare for retirement in other ways, for example by owning property to rent out, or by saving money in a Lifetime ISA savings account.

Read more about pensions on the government’s Pensionwise website.

You must have paid National Insurance for at least 10 years to get some State Pension. The maximum was £175.20 a week in the 2019/20 tax year. To get this, you would need to pay National Insurance for 30 years.

You cannot apply for your State Pension until you get to the right age (at least 65). If you wait until you are older, you can get bigger payments later.

If you have missed paying NI contributions in some years, it is possible to complete them before you retire. Be aware you can usually only complete missing payments from the past 6 years.

There’s an easy way to check your State Pension online on the main government website.

The government provides a free service called Pensionwise for people aged 50 or over. It can help explain how much pension you will get when you retire and how best to use it. You can speak to an impartial advisor or use the online help. Go the Pensionwise website to find out more.

If you are over 22 and you are paid more than £10,000 a year, you should normally have some of your wages paid into a pension. This is called Automatic Enrolment.

The minimum is 8% of earnings between £6,136 and £50,000. The money comes from your employer, your wages and government tax relief.

Some employers have different schemes that pay more. Speak to your employer for advice.

The Pensions Advisory Service website can give advice about workplace pensions.

Self-employed people can get a State Pension in the same way as employees. However, if you want more pension money, you will need to set up a pension yourself. You get tax relief on any amount you save for your pension. This starts at 25% for someone earning the basic rate of tax – if you saved £100, you’d get an extra £25 from the government.

There are 4 pension options. You can have more than one:

• Open a pension with the government’s NEST scheme
• Start a pension with a pension provider, which will manage it for you
• Open a SIPP (Self Invested Personal Pension) and choose your own mix of investments
• If you are under 40, you could save for retirement using a Lifetime ISA. This is a special savings account where the government will add money. Look online for LISA accounts.

Read more about NEST on the NEST website.

Read more about SIPPs on the Money Advice Service website.

In theory, it is possible to make a will without legal advice. However, there are strict rules that must be followed. Unfortunately, many people do not follow them all. This means their will is not legally valid when they die – which can cause many problems. It could even mean the UK government takes all their assets.

To be safe, especially if the will is complicated or there is a lot of money involved, use a solicitor (lawyer).

The money and assets belonging to someone who has died is called their ‘estate’.

Inheritance tax is 40% anything in the estate over a certain amount, called a ‘threshold’. This includes assets in the UK and worldwide. Everything must be declared to HMRC (the government tax department), even if there is no tax to pay. The threshold is normally £325,000, but it can be higher in some circumstances.

It is also possible to pay less than 40% tax on some assets, such as gifts, business assets, agricultural land or large charity payments. Speak to a tax adviser.

If you have non-domiciled status, you do not usually have to pay UK inheritance tax on any foreign assets unless:

• you had your permanent home in the UK at any time in the last three years of your life.
• you were a UK resident for at least 15 of the past 20 tax years.

If you think this might apply to you, get legal advice because there could be large amounts of money involved.

Read more about these topics:

• More about inheritance tax on the main government website
• For someone living outside the UK, go to the main government website