Someone taking cash out of a cashpoint machine

Finance and Banking in the UK 

Money 

In 1971, the UK decimalised its currency, opting to use two units – pounds (£) and pence (p). 

There are 100 pennies to the pound. 

Notes are in denominations of £5, £10, £20 and £50. 

Coins are in denominations of £2, £1, 50p, 20p, 10p, 5p, 2p and 1p. 

Each note varies in size, with £5 notes being the smallest and £50 notes being the largest. It is worth noting that £50 notes are quite rare, and some shops will not accept them because of the danger of forgeries. Coins also vary in size, and in some cases, shape. 

In conversation, shop workers often do not say pounds, and will instead say for example, “six-fifty” for something that costs £6.50. If something costs less than £1, people will often say “pee” or “pence” (e.g. 99p). 

‘Quid’ is also a popular substitute for the word ‘pound’. For example, shop workers may say ‘ten quid’, which simply means £10. 

Currency conversion

One Great British Pound (GBP) roughly equates to:

  • €1.17 (Euro)
  • $1.38 (US Dollar)
  • ₹101.85 (Indian Rupee)
  • ¥8.93 (Chinese Yuan)

(Please note, rates may fluctuate over time)  

Applying for a bank account 

In order for your employer to pay you, you must open a UK bank account. This is a straightforward process with which your employer should be able to provide assistance. UK bank accounts can be opened online or in-branch and can take up to one week to set up. To open an account, you will require a valid form of identification (ID) (e.g. a passport or driving licence) and a letter from your employer confirming your place of work, date of employment and your current salary. You will also be asked for proof of address (e.g. a utility bill). As you may not be able to provide this, your new employer can supply you with a letter confirming your address, if necessary. 

We recommend using HSBC as they offer a fairly hassle-free process. Other banks you could try are Lloyds TSB, Santander, Barclays, Halifax and NatWest. Banks and building societies can be found in most high streets and are generally open between 09:00 and 16:30, Monday to Friday; however, opening times can vary. Some banks in larger towns and cities may also open on Saturdays. 

Banks are closed on public holidays (also known as Bank holidays) and some banks in Scotland close for an hour at lunchtime. Many banks now have 24-hour banking lobbies where you can access a range of services via the ATMs (also known as cash machines), while support is available 24 hours a day, seven days a week (24/7) online. 

Income Tax 

Living in the UK, you will be expected to pay tax on your income. This tax is deducted from your pay each month, providing you earn more than £12,570 annually (this amount is known as your Personal Allowance and can fluctuate depending on your income).  

The amount of tax you pay each year depends on: 

  • How much of your income is above your Personal Allowance 
  • How much of your income falls within each tax band

The UK tax year runs from 6 April to 5 April the following year.

Taxation thresholds in the UK 

Every employee has tax deducted at source from their earnings by their employer, which is paid over to HMRC on behalf of that employee. 

The thresholds and tax rates change every year and the latest thresholds and tax rates can be found at the HMRC website: Income tax rates and allowances. 

To complete your tax return you must keep: 

  • Copies of all your P45s – these are the tax certificates you get when you leave an employer (you may have more than one in a year) 
  • P60 – this is the end of year tax certificate issued by your employer 
  • All of your payslips 

Further useful information can be found on the HMRC website: Coming to work in the UK.

National Insurance

As a UK worker, you must pay National Insurance (NI) in order to build up your entitlement to certain state benefits, including the state pension. These contributions are based on the amount of money you are paid and are deducted from your salary each month.

Your NI number is unique to you and ensures that your contributions and tax payments are properly recorded against your name. It also acts as your reference number in any dealings with the Department for Work and Pensions and HM Revenue and Customs (HMRC). It is very important to keep your NI number safe, ensuring it is not given to anyone who does not need it; this will help minimise the risk of identity fraud.

To apply for a NI number you must attend an interview at Jobcentre Plus. You will need to call 0800 141 2075 and arrange your interview. To this appointment you will need to take the following items:

  • Passport
  • Proof of your address in the UK (e.g. letter confirming accommodation arrangements)
  • Proof of employment (your contract of employment) 

Pension 

The State Pension ensures that everyone has a solid financial foundation when they retire and is funded by National Insurance. 

Once you reach the State Pension age, you will begin receiving regular payments from the government.

In order to receive the State Pension, you must have at least 35 years of NI contributions.

All payments depend on your own NI record and not your current salary. 

Find out more

Read more on getting settled and daily life in the UK. 

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