SHARE
COPY LINK
For members

MONEY

Ask an expert: Which are the best UK banks for Brits living in Italy?

An increasing number of British high street banks are closing the accounts of customers living in Europe - so what are the best options if you still need a UK account?

Ask an expert: Which are the best UK banks for Brits living in Italy?
Having a UK bank account is vital for many Brits in Italy, but is becoming increasingly complicated. Photo by rupixen.com on Unsplash

The great majority of Brits who live in Italy have an Italian bank account – but many also have accounts in the UK.

UK accounts are often still needed to receive pensions, income from property rental or work done in the UK, or to hold savings or pay bills in the UK.

READ ALSO: Banking giant Barclays to close accounts of Brits living in Italy

Many UK pension providers will only pay into a UK account, while direct debits including mortgage payments can often only be taken from a UK account.

Having a UK account is therefore vital to many, so we asked Ryan Frost, private client adviser at Harrison Brook, for advice.

UK high street banks

Most Brits who move to Italy will have an account with a UK high street bank, and in many cases have had the same account for decades. But increasingly British high street banks are telling their customers living in the EU that they will no longer serve them.

The latest bank to do this is Barclays, which has announced that it will close all current and savings accounts of its customers who live in an EU or EEA country.

Most other high street banks will not allow you to open a new account without being resident in the UK.

For those who already have an account with a bank other than Barclays, the picture is mixed.

Some banks have already asked customers to close their accounts while others say they have no such plans at present – but account closures is a pattern that has been seen across the EU since Brexit, when British banks began to need separate banking licences for each EU country they operate in.

Ryan said: “Many people have had accounts with, for example, Barclays for 50 or 60 years so are very loyal to their account and used to it, and it’s a surprise to be suddenly told your account is being shut down.

“But since Brexit banks need extra licences to operate in EU countries and many of them are just deciding that it’s not worth it.”

Expat/international accounts

Many UK high street banks offer ‘expat accounts’ or ‘international accounts’ aimed at UK nationals who live outside the UK.

The major drawback is the cost; many accounts have a minimum deposit level – £20,000 to £40,000 is common – or stipulate a minimum annual income, so they may not be suitable for pensioners, people on a low income or people who just want to use their account for a few basic functions while keeping most of their income/assets in their Italian account.

Most expat/international accounts also charge a monthly fee and some charge transfer fees on top of that. 

Ryan said: “These are often operated by the bank’s international arm eg HSBC International which is based in Jersey, and they’re really aimed at high-value, working, transient expat types, so they’re not really designed for UK pensioners who are living in Italy, for instance.

“They will give you a UK account number that you can use for pensions, direct debits etc but they often charge high fees.”

Internet banking

The last few years has seen a proliferation of new internet banks, which offer online-only services and operate across Europe.

The advantage of these is that you can sign up with an Italian address and then carry out transactions in the UK or Italy using either sterling or Euro.

Many people use internet bank accounts when they first move to Italy before they set up Italian accounts, but they’re also increasingly being used to carry out UK transactions as they can offer a UK account number and sort code – vital for certain types of transactions.

The disadvantage for some people is their lack of a physical presence so in case of a question or a problem contact can only be made by phone or – more usually – via email or chatbot. Most internet banks also do not issue chequebooks or accept queues, which can be a problem for some customers.

barclays closes accounts spain customers

Since Brexit, the UK banking sector no longer has access to the ‘passporting’ system which allows banks to operate in multiple EU countries without having to apply for a separate banking licence for each country. Photo by Tolga Akmen / AFP

Ryan said: “Digital banks are generally where we advise our clients to look, for example Wise (formerly the money-transfer service Transferwise, now set up as a bank), Revolut or Starling. 

“These are new challengers on the banking scene and the advantage for Brits living in Italy is that you can set up both a Pounds sterling and a Euro account and you will get both a GB sort code/IBAN – which will allow you to set up direct debits or receive a UK pension – and an EU account number and IBAN, usually through Belgium.

“It means you can use the account for business in the UK, but also transfer money quickly and easily to/from Italy. In fact for UK pensioners this might give them a better deal on exchange rates than receiving a pension into a UK account in pounds and then spending in Euros in Italy.”

There’s a tendency to assume that internet-only banks are less secure, which isn’t necessarily the case, but if there are problems it can be harder to get redress.

Ryan said: “The thing you need to look for is whether the bank has a UK banking licence. Some of them only have an e-money licence – you can still use these accounts but having the UK banking licence means you have the same level of security and fraud prevention as any UK high street bank.”

Italian banks

Most Brits living in Italy already have a Italian account for daily life, but can you use this for all your financial affairs?

It depends on your situation, but some UK-based transactions require a UK account.

For example many UK pension providers will only pay into a UK account and if you have property in the UK you will probably need to set up direct debits for mortgage payments, utilities, council tax etc and most of these can only be done with a UK account.

Keeping a UK address

Many UK residents in Italy get around the problem by using a ‘care of’ address in the UK in order to retain their British bank account – usually either the address of a property that they own or the home of a relative.

Whether this is allowed or not is a bit of a grey area.

Ryan said: “This is a bit complicated because there’s a big difference between having UK residency and using a UK address such as the address of property you own or a family member’s address.

“If you try to open a new account with a high street they will ask you whether you are a resident in the UK.

“For people with existing accounts it’s technically OK to use a UK address as a contact address, but as banks share more and more information sooner or later they will probably ask you whether you are a UK tax resident, at which point you will have to tell them that you are resident in Italy.”

Ryan Frost is a private client adviser at Harrison Brook, which offers financial and pensions advice to expats in Italy.

Member comments

  1. May be it would be a good idea to mention italian banks which are handling foreign accounts. I am an american citizen so I am the worst nightmare for banks as the usa has so many paper works requirements. But I opened successfully an foreign account at the Banca Intesa San Paolo. Try it. It works.

Log in here to leave a comment.
Become a Member to leave a comment.
For members

MONEY

EXPLAINED: What is Italy doing to cut the rising cost of living?

Amid soaring inflation and price rises, the Italian government has announced new measures to help families and businesses keep costs down. Here's what you need to know.

EXPLAINED: What is Italy doing to cut the rising cost of living?

Italy approved a much-anticipated aid decree on Thursday, August 4th, bringing a new round of state funding intended to tackle the country’s most critical issues: from the rising cost of living and sky-high inflation to the energy and supply crisis. 

READ ALSO: Fuel tax cut and help with energy bills: Italy approves inflation aid package

The ‘aiuti bis’ aid package, worth around 17 billion euros ($17.4 billion), likely marks the last major act by outgoing prime minister Mario Draghi before an early general election next month.

The funding is seen as badly needed after inflation hit 8 percent in Italy in June – the most severe spike the country has experienced since 1976.

After weeks of speculation about exactly which measures may or may not be included in the decree, we now know it contains everything from an extension to the fuel duty cut to more help with energy bills for those on lower incomes.

Here’s what you need to know about the latest measures intended to keep the cost of living under control.

Extension to fuel duty cut 

The current discount on fuel duties is to be extended again to September 20th, though the value of the discount will drop from 30 to 25 cents. 

The discount was recently extended to August 21st but the government decided to further prolong the incentive in a bid to ease the blow that record fuel prices have dealt to consumers and businesses.

The cut was initially introduced as far back as March when the average prices at the pump for petrol and diesel both exceeded the two-euro mark.

Help with energy bills

Measures introduced in the first half of the year to help lower-income households and vulnerable people pay rising energy bills will be extended under the new decree.

It extends an existing government discount on gas and electricity bills for a further three months, until the end of 2022, as well as reducing system charges.

READ ALSO:

Italy’s tax on the ‘excess profits’ of energy companies has meanwhile been extended to June 2023 after the government reportedly received fewer payments than expected.

Tax cut for employees

Workers earning a gross income of under €35,000 are eligible for a two percent tax saving, amounting to a small monthly ‘pay rise’ until the end of this year.

“Already in the budget law we reduced social contributions by 0.8 percent; for the second half of the year this reduction goes up to 2 percent, as we’re now adding 1.2 percent”, said Economy Minister Daniele Franco at a press conference on Thursday.

As the tax relief lasts until the end of the calendar year for a six-month period, the July deduction will be retroactive.

New aid measures announced on Thursday are hoped to boost Italy’s consumer spending power as the cost of everyday goods rises. Photo by ANDREAS SOLARO / AFP

Those earning €35,000 can expect to save around a further €30 per month (1.2 percent of a monthly salary of €2,692 – most Italian salaries are paid out over 13 rather than 12 months to give employees a tredicesima Christmas bonus).

To find out how this may apply to you, it’s advisable to speak to an accountant or your local Italian tax agency (Agenzie delle entrate) office.

More funding for mental health treatment

The new decree will also enhance the existing ‘psychologist bonus’ (bonus psicologo) by allocating an additional 15 million euros to the measure. This will bring the total amount of funds available for the bonus to 25 million euros. 

The bonus was officially introduced at the end of July to help make mental health services more affordable, amid a pandemic-induced crisis in Italy.

All individuals with an Isee (a calculation of relative household income and wealth) lower than 50,000 euros will be eligible to receive a 600-euro voucher, which they’ll be able to use when seeing professionals listed on Italy’s official register of psychologists.

See more information about claiming the bonus in a separate article here.

Discount on public transport tickets

The government will allocate a total of 101 million euros to funding its ‘transport bonus’ (bonus trasporti); 22 million more than the original amount.

The bonus takes the form of a one-time 60-euro discount to be used on the purchase of monthly or yearly tickets for local transport services.

It will be available from September 2022 to all pensioners, students, and employees with an Isee of up to 35,000 euros.

SHOW COMMENTS