How to receive payments in the UK

By Margaret Nguyen•Published on 7 March 2022•3 minutes

In this article

•
UK business bank accounts
•
Tax considerations
•
Conversion issues
•
How Airwallex global accounts can help save your business time and money

Regardless of where they operate, companies worldwide all have similar goals when it comes to payments: quick, secure, and reliable processing that won’t slow down their success.

If your business is undertaking expansion to the UK, you’ll need to consider the currency difference, specific tax stipulations, conversion issues, and the logistics of receiving payments in the UK. Here’s what to know.

UK business bank accounts

Wouldn’t it be easier to just send all of your payments coming from the UK over to your home country for processing?

Although it might seem so, if you’re a service provider with clients in the UK, or an eCommerce seller with UK customers, you’ll find that having a business bank account in GBP (British Pound Sterling) currency will make the whole thing a bit easier on your wallet.

Sending and receiving transactions through a UK bank account can help eliminate extra fees and take less time than waiting for an international bank transfer.

In order to set up a UK business account, make sure you have the following:

Legal proof of identification for all directors in your company (passport, driver’s license, social security card, etc.)
Proof of address found on a recent bank statement or other official piece of mail
Company contact details and full business address
Estimated annual turnover

Many of the larger banks operating in the UK allow non-UK residents to create bank accounts online, but you may need to make a large initial deposit.

Speak with a bank representative directly in order to ensure you’re making the right choice when it comes to a UK bank for your business needs.

Tax considerations

Processing payments overseas will require you to abide by certain UK-specific tax regulations as well, including value-added tax, or VAT.

VAT applies to most goods or services bought and sold for us in the EU and is charged as a percentage of the total price. Businesses pay VAT to revenue authorities in the form of partial payments.

Since this type of tax may not exist in your country, familiarizing yourself with the VAT process is essential if you’re operating overseas. Find up-to-date VAT rates on the GOV.UK’s site.

“When prices are calculated, this is often first done with net values. Keep in mind that the price you have calculated is the price you want to receive for your product or service, and to that you need to add the VAT, as in this calculation example."

-hellotax

Online resources such as hellotax can help streamline the VAT process so you can operate your UK business more efficiently. VAT software from hellotax puts all of your VAT registrations and filings on autopilot.

Conversion issues

You may run into some currency conversion issues as well if you’re receiving payments from clients or customers in the UK.

Forced conversion

Forced currency conversion fees happen when operating through eCommerce platforms such as Amazon. In order to receive your payment, these platforms force the received funds (GBP) to convert to your home currency before you can withdraw them.

For example, when Amazon converts GBP to United States Dollars during revenue transfers, the forced conversion process can cause the funds to lose anywhere between 1-12% of the total.

Double conversion

The process of double conversion can cost you even more.

Say you need to receive your UK funds in US dollars, and they lose value in the first conversion. Now that you have your money, you need to send some of it back to the UK to pay your overseas contractors, vendors, and employees. It will end up going through a second forced currency conversion process.

Receiving your home currency from the UK might seem easy enough. However, issues such as forced conversion and double conversion can negatively impact your bottom line and cost a business hundreds of thousands of dollars annually.

How Airwallex global accounts can help save your business time and money

Holding an Airwallex foreign currency account allows you to freely receive and send payments internationally without any additional operating fees and conversion costs.

Use Airwallax’s global accounts to collect and spend in the same currency, convert and withdraw funds into your preferred currency, and improve your company’s bottom line with zero transaction fees and competitive FX rates.

Our global accounts allow you to seamlessly integrate with other global eCommerce platforms such as eBay, Shopify, and PayPal. With zero monthly fees and no minimum transactions, our global accounts are fee-free and easy to manage.

Need more information and support? From virtual cards to international online payment products and more, Airwallex is your No. 1 resource for modern, global business support and border-free finances.

Contact us today to see how Airwallex global accounts can streamline your UK expansion and help you receive payments in the UK.

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