How best to cash a (large) US dollar cheque - and get a good FX rate?
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Title says it all really; what are the options available for getting a US issued cheque (WellsFargo bank) in USD, converted to GBP? I've had some feedback that I should open a US dollar account in the UK to cash the cheque, then once it has cleared shop around for FX conversions.
Is that my best bet or is there something 'clever' I could do?
MrChris
1 year ago
Expert Financial Adviser Answer
Darren Smith
answered 1 year ago
to be honest mrchris, the "clever" option would have been to look into an electronic transfer from the US in £ as this would normally have given the best outcome at the time. any transaction with foreign currency cheques will nearly always be more expensive than a direct transfer as there will be handling costs.
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SquareInsider
answered 1 year ago
Chris.,
Not sure whether you are USA national, and how much cheque is worth. If it is $50,000 USD and above, then the prudent advice is to open a Offshore Trading Bond. Buy USA shares such as Glaxo at ave Unit Nav Rates. Div Incomes around 4.25 %. Transfer shares into the OTB. Naturally, you may have to wait a month or so for GSK to rise above the Unit Nav Rates bought at outset. Liquidate GSK shares accordingly. Proceeds are now tax free in your OTB ok. Buy Cap Gtd Bonds at 10.25 % via your OTB. Sit back and take incomes. OTB's are life ins bonds, so income and gains are tax free. 101 % LifeCo cover ensures that you're partner & children are paid in full + 1% free of inheritance tax anywhere in the world. It's a no brainer solution. Jaq2002@Gmail.com
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Not sure whether you are USA national, and how much cheque is worth. If it is $50,000 USD and above, then the prudent advice is to open a Offshore Trading Bond. Buy USA shares such as Glaxo at ave Unit Nav Rates. Div Incomes around 4.25 %. Transfer shares into the OTB. Naturally, you may have to wait a month or so for GSK to rise above the Unit Nav Rates bought at outset. Liquidate GSK shares accordingly. Proceeds are now tax free in your OTB ok. Buy Cap Gtd Bonds at 10.25 % via your OTB. Sit back and take incomes. OTB's are life ins bonds, so income and gains are tax free. 101 % LifeCo cover ensures that you're partner & children are paid in full + 1% free of inheritance tax anywhere in the world. It's a no brainer solution. Jaq2002@Gmail.com
Expert Financial Adviser Answer
Darren Smith
answered 1 year ago
the above comment from squareinsider has been reported.
the no nobrainer solution is fundamentally flawed and an inappropriate answer to the question of how to clear a cheque. the questioner wasnt asking on how to speculate on the encashment proceeds by playing the market and paying exceptional costs to set up an investment vehicle. and as to how that person can claim no IHT anywhere in the world is beyond me as they dont even know your circumstances.
i would take the comments with a salutory pinch of salt.
as with all things, please do your research and do not accept market risk where it is not appropriate to. its almost like someone asking the question "how do i buy a new car" and being given the answer "torch the old one and claim off the insurance"!
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the no nobrainer solution is fundamentally flawed and an inappropriate answer to the question of how to clear a cheque. the questioner wasnt asking on how to speculate on the encashment proceeds by playing the market and paying exceptional costs to set up an investment vehicle. and as to how that person can claim no IHT anywhere in the world is beyond me as they dont even know your circumstances.
i would take the comments with a salutory pinch of salt.
as with all things, please do your research and do not accept market risk where it is not appropriate to. its almost like someone asking the question "how do i buy a new car" and being given the answer "torch the old one and claim off the insurance"!
Expert Financial Adviser Answer
James Brooke
answered 1 year ago
Pity SquareInsider does not let us have his real name so that we can check him out on the FSA register at www.fsa.gov.uk/register/home.do
Not only does he not answer the question, but SquareInsider is also wrong to say that "OTB's are life ins bonds, so income and gains are tax free" in fact they are tax deferred and tax will be payable at your highest marginal income tax rates on maturity.
Also, you can only take 5% of the original amount invested, as income, each year, any amount over this will be immediately taxable.
Likewise, after 20 years the 5% tax deferred allowance will have to cease, as any further payments would then be taxable.
Furthermore, the bond would have to be written in trust to be potentially outside your estate for IHT purposes and this could trigger entry, periodic, and exit charges instead of IHT. Also you would potentially need to survive 7 years for this not to be a Potentially Exempt Transfer (PET)
If it sounds too good to be true, it probably is. Offshore bonds tend to be expensive, so be very careful of anyone recommending them unless you have maximised your ISA allowance every year and intend to continue to do so in the future and you are using your Capital Gains Tax allowance in full every year.
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Not only does he not answer the question, but SquareInsider is also wrong to say that "OTB's are life ins bonds, so income and gains are tax free" in fact they are tax deferred and tax will be payable at your highest marginal income tax rates on maturity.
Also, you can only take 5% of the original amount invested, as income, each year, any amount over this will be immediately taxable.
Likewise, after 20 years the 5% tax deferred allowance will have to cease, as any further payments would then be taxable.
Furthermore, the bond would have to be written in trust to be potentially outside your estate for IHT purposes and this could trigger entry, periodic, and exit charges instead of IHT. Also you would potentially need to survive 7 years for this not to be a Potentially Exempt Transfer (PET)
If it sounds too good to be true, it probably is. Offshore bonds tend to be expensive, so be very careful of anyone recommending them unless you have maximised your ISA allowance every year and intend to continue to do so in the future and you are using your Capital Gains Tax allowance in full every year.