Why UK bank charges are not taken account when looking on interest for taxation?
"When I left the UK four years ago, free banking is still an option and I'm pretty sure it still is.  Therefore, you have chosen to have a bank account with a 5.00/month charge.   In return for this charge, you will be eligible to receive certain benefits.  For example; reduced borrowing costs, discounted mortgage rates, free overdraft on small amounts, ""rewards"" for paying household bills by direct debit, and things of this sort.   Amongst these benefits may be preferential savings rates.  However, from HMRC's point of view it will be the extra perks you are paying for with your monthly charge.  You have chosen to pay for the account and HMRC is not interested in how you choose to spend your money, only in the money you earn. While I agree with you that it does have an element of unfairness, the problem is how would you divide the cost amongst the various benefits." Because your profit from the capital IS 100 quid. Capital gains is not like running a business and doesn't come with tax deductions. It's up to you to pick saving scheme that maximizes your profit (either via low costs or highest possible rate).
The UK doesn't tax gifts or wealth, so you don't have to pay any tax on your existing savings or the money your parents transfer you. If your parents lived in the UK then you might be potentially liable to inheritance tax on the money if they died less than seven years after giving it to you, but if they live in Japan this won't be relevant. In theory you might have to pay tax on any interest received in the bank account while you live in the UK. However this is likely to be very small, and if you don't have any other income then it's highly unlikely this would apply, as you can get up to £16,000 of interest without paying tax: https://www.gov.uk/apply-tax-free-interest-on-savings/how-much-tax-you-pay In addition to above points : Interest earned on NRE accounts are tax free. But you can deposit any foreign currency except INR. Nothing is taxable. While the NRO account gives you a flexibility to deposit INR too, the interest will be taxable and tax will be deducted at source at the rate of 30.9%. It is necessary to convert the existing Indian local accounts to NRO as per the Reserve Bank of India circular: RBI/2007-2008/242 Master Circular No. 03 /2007- 08 . So basically you need: One option might be to use tax certificates to save this money. At the moment they don't pay any interest (unless you deposit more than £100,000 at once), so they aren't very attractive from that point of view. But they do give you a clean way to segregate your money and for the purposes of charging penalty interest, HMRC will treat you as having made the payment at the time you purchased the certificate, if it turns out that you should have paid the actual tax earlier than you did. Another option is a regular saver account. These typically have limits of £250 per month, so you might have to open a few given the amount you have to save. That would add up to a lot of maintenance effort, particularly as you'd have to open new accounts again each year. However, they do typically offer good interest rates compared to what's available elsewhere, and the way they operate fits well with your needs (money coming in regularly and then going out all at once). 1% is below interchange, so you either 1) take mostly debit, 2) have someone willing to literally lose money paying the banks for you, or 3) have hidden/padded fees somewhere else.  Edit: Or 4) Have customers pay the fees through surcharging. Summarized article: The London-based investment bank Barclays Bank has agreed to pay penalties of $450 million to settle charges it attempted to manipulate key benchmark interest rates.   The settlement is with the US Department of Justice, the U.S. Commodities Futures Trading Commission and the British Financial Services Authority (FSA).   Investigators found that Barclays manipulated the London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor) which measures how much banks will charge each other for loans, and in turn, affects the cost of loans and mortgages to consumers.   Between 2005 and 2009, Barclays staff would base its estimates for the Libor on the requests of its derivatives traders, who wanted to manipulate the rate to benefit their trading positions. The traders would ask their Barclays colleagues to adjust their rate estimates up or down to post a profit for the bank.  The FSA said that Barclays appeared to have a wide acceptance of its derivatives traders lobbying its colleagues and found evidence through a trail of emails and instant messages.   Barclays has admitted its actions fell short of industry standards but it is unclear if there was any impact to consumers.   The FSA is investigating several major banks for similar violations.  * For more summarized news, subscribe to the [/r/SkimThat](http://www.reddit.com/r/SkimThat) subreddit "The banks are making *bank* on these fees and for merchants they are not *optional.*  They either have to raise their prices and charge *you* or eat the costs.  The banks are doing nothing to ""earn"" this money.  Now you know I am serious." "That wasn't an ""inheritance"" that arrived out of the blue and the ""bank"" contacted your girlfriend by email, was it? A UK tax code is basically an assessment of how much money you can earn in the UK before you have to pay tax on it - basically it's a coding for a tax allowance and as a UK tax payer HMRC (the UK version of the IRS) gives you one for free. If your girlfriend is not a UK tax payer she should get the necessary paperwork to show that she isn't, although I'm not sure if that's got any bearing on inheritance tax. There are no lawyers involved in that process normally, any appropriately accredited accountant can do that for you in the UK if you're not in the UK. When I had to apply for a change of tax status in the UK it certainly didn't cost me $9.6k to do so via my accountant there. In fact the whole thing cost a few pounds to pay for my accountant's time and that was it. In fact, that whole thing smells fishy to me as someone who used to live in the UK. Care to divulge the name and possibly address of the bank? Here's inheritance tax information straight from the horse's mouth. That should clear up any questions if your girlfriend is even liable for any inheritance tax in the UK in the first place. And then, given the sums involved, get the recommendation for a good lawyer and a good accountant in the UK (or an accountant who can recommend a lawyer) to make sure that that end of the transfer goes smoothly." "would it make sense to set up multiple bank accounts to avoid going above their thresholds?  Quite possiblly yes but you need to pay attention to the fine print. I don't know what the situation is in poland but in the UK accounts that pay high interest often have strings attached. For example the santander 123 current account pays very good interest but it has an account fee and some other requirements that are difficult to meet if you are not using it as your ""main current account"".  You need to read the terms carefully, if you go over the threshold does the lower rate only apply to money over the threshold? or does it apply to all the money in the account? Are there any other restrictions on how you use the account. Also I don't know if poland has any provisions for limited tax-advantaged savings (like the ISA scheme we have in the UK). If it does then that can add further complications. How to calculate how to maximize the profit here? Well in theory you would get the best account you can and fill it to the threshold. Then the next best account and so-on. You would move any interest paid in an account that was already full to the threshold to the best non-full account (or if the account strongly peanalises going over perhaps move an ammount of money equivilent to the interest just before the interest is paid). In practice that is a lot of work, so if the rates on the different accounts are similar you may want to leave some margin for interest or (in the case of an account that pays the lower rate on the overage while still paying the higher rate on money below the threshold) accepting that some of your money will earn slightly less than idea. Another option some accounts may offer is just to pay the interest to another account, avoiding the need to move it yourself. Finally you should check out your government's limits for compensation in the event of banks going bust. As a general rule you don't want to put more than that ammount in a single bank even if doing so would get you the best interest." It makes no difference (to the UK) what country a bank account is in.  What matters is whether you are resident in the UK or not while employed locally in a foreign country.  You're taxed on where you are tax resident (which could be either country, both, or neither), not where the money is earned or banked.  You can assume, with modern exchange of information agreements, that all money you put in bank accounts anywhere in the world will eventually be known to the UK authorities. The rules for when you are a UK tax resident changed recently, there is now a statutory test for residence (pdf).  The rules are complex, but in general if you are outside the UK for less than one full tax year you're still resident, and in many cases where you're gone longer than that you may still be, depending on the length of your trips back to the UK and the ties you have there. So a 6-month winter job in Thailand teaching English as a foreign language will be subject to UK tax if you come back after, even if you leave all the money there or in a third country. If you pay local tax as well there are agreements between countries to avoid double taxation, but these do vary.  What you do about National Insurance payments while gone for a short time is another complex area. ...and charge it back to the customer.  So, I'm confused.  Are the fines designed to discourage future transactions or simply there to provide a cost to the client?  I guess the fact that no bankers have gone to jail over this answers that question. Not for the amount in the accounts but for the interest you earn per year is taxable. But the sum of your all taxable incomes is under the limit, then you dont need to pay any income tax. The limit is available at wiki here But you should intimate your bank not to deduct TDS (Tax Deducted at Source) by submitting Form 15G/15H (which will be normally available in Bank itself), provided your total interest income for the year will not fall within overall taxable limits. You may calculate your income tax amount at Official website at here The company says it's out of their control - it isn't. All they have to do is to INSTRUCT HSBC to send a certain amount of GBP, and then HSBC MUST send GBP.  Obviously the bank doesn't like that because they make money through the conversion. That's not your problem. When told to send GBP, they must send GBP.  Depending on what your relationship with that company is, you lost money because they didn't send the GBP. At the very least, they sent you four percent less in Euros than they should have sent you. So send them a bill for the difference. It's unfortunate that your bank charged for the conversion Euro to GBP, but fact is that less than the agreed amount arrived at your bank, and that's the responsibility of the sender. "Perhaps it's the terminology ""fee"" that makes it a little confusing. I'm not sure whether it's due legislation or if it's tradition but banks and money changers in my country don't charge ""fees"". Instead they advertise separate prices for buying and selling money. For example they'd normally advertise: USD, we buy: 4.50, we sell: 4.65. It's a business. Just like selling cars or lemonade selling money only makes sense if you sell it at a higher price than what you bought it for. Regardless of what you call it it's the profit margin for the seller." Unless you're running a self-employed business with a significant turnover (more than £150k), you are entitled to use cash basis accounting for your tax return, which means you would put the date of transactions as the payment date rather than the billing date or the date a debt is incurred. For payments which have a lag, e.g. a cheque that needs to be paid in or a bank transfer that takes a few days, you might also need to choose between multiple payment dates, e.g. when you initiated the payment or when it took effect. You can pick one as long as you're consistent: You can choose how you record when money is received or    paid (eg the date the money enters your account or the date a cheque   is written) but you must use the same method each tax year. In the UK is perfectly acceptable to use your personal bank account as a business account if your a sole trader, although it can be messy. Just record and keep all relevant transaction invoices etc documents for self assessment time. At self assessment time they will tell you the amount of tax you need to pay when you fill out the forms. Not sure how it is Canada.  If you get bigger get an accountant.