Consultancy work paid in US dollars, any advice?
Discussion
Not sure if best in business or finance section but thought I would start here!
I am a PAYE earner but have been offered some additional consultancy work by an outside company which is a new gig for me.
The company will pay me per hour in US dollars. Is it as simple as this going directly into my UK bank account? It won’t be huge amounts initially, and is just a bit of extra pocket money and so exchange rate is not critical. There is a small chance that this could grow but will depend upon the success of the product they are developing. Maybe better to set up properly at outset?
Are there any other considerations I haven’t thought of?
I will inform my current employer of the additional work and obviously will include on my annual tax return
This is all a bit new to me and don’t want to make a schoolboy error!
I am a PAYE earner but have been offered some additional consultancy work by an outside company which is a new gig for me.
The company will pay me per hour in US dollars. Is it as simple as this going directly into my UK bank account? It won’t be huge amounts initially, and is just a bit of extra pocket money and so exchange rate is not critical. There is a small chance that this could grow but will depend upon the success of the product they are developing. Maybe better to set up properly at outset?
Are there any other considerations I haven’t thought of?
I will inform my current employer of the additional work and obviously will include on my annual tax return
This is all a bit new to me and don’t want to make a schoolboy error!
So a couple of things to keep in mind.
The first is to check that your bank accepts foreign currency payments. Any of the main ones will but if you bank with the Finetech banks (Starling, Monzo, Tide, etc.) then this isn't always possible. Never assume because if they pay your invoice and the bank bounces the payment back to the client, it can be a major pain to get the money repaid to you - and can take time.
Make sure that your invoice contains the international info the client will need to pay you - this will be the IBAN code and usually the SWIFT/BIC code as well.
Although you say this will only be small amounts, the exchange rate may still impact you. It would be worth you opening up a USD account with your bank or another bank. The Dollars arrive in that account and stay Dollars until such time as you move them to a GBP account. Doing that means you can manage exchange rates, moving the money over when the exchange rate is more favourable. There's also benefits in terms of bank charges in doing this.
This obviously assumes you don't need the money straight away. If that's the case, then you need to consider exchange rates in your pricing if you can.
Other than that, it's all pretty painless and simple.
The first is to check that your bank accepts foreign currency payments. Any of the main ones will but if you bank with the Finetech banks (Starling, Monzo, Tide, etc.) then this isn't always possible. Never assume because if they pay your invoice and the bank bounces the payment back to the client, it can be a major pain to get the money repaid to you - and can take time.
Make sure that your invoice contains the international info the client will need to pay you - this will be the IBAN code and usually the SWIFT/BIC code as well.
Although you say this will only be small amounts, the exchange rate may still impact you. It would be worth you opening up a USD account with your bank or another bank. The Dollars arrive in that account and stay Dollars until such time as you move them to a GBP account. Doing that means you can manage exchange rates, moving the money over when the exchange rate is more favourable. There's also benefits in terms of bank charges in doing this.
This obviously assumes you don't need the money straight away. If that's the case, then you need to consider exchange rates in your pricing if you can.
Other than that, it's all pretty painless and simple.
vaud said:
Ensure you have a simple B2B contract with the US firm that explicitly states you are an independent contractor
Since the client is based in the US you need to fill out an IRS form called a W-8BEN which will stop them withholding 20% (?) for the IRS.
The OP hasn't said it's a US company, only that he is getting paid in dollars. Since the client is based in the US you need to fill out an IRS form called a W-8BEN which will stop them withholding 20% (?) for the IRS.
OP: The income is reported on supplementary sheet SA106 - you'll need to start doing Self Assessment. You might also need to advise HMRC of self-employed status. Note the exchange rate applicable on the date of each payment & use that to convert $ to £ for the SA return. If tax is deducted by the company paying you check if Dual Taxation Relief is applicable. An account which can take dollar deposits (such as the Revolut one mentioned) makes things easier.
https://www.gov.uk/government/publications/self-as...
https://www.gov.uk/government/publications/self-as...
Mr Pointy said:
vaud said:
Ensure you have a simple B2B contract with the US firm that explicitly states you are an independent contractor
Since the client is based in the US you need to fill out an IRS form called a W-8BEN which will stop them withholding 20% (?) for the IRS.
The OP hasn't said it's a US company, only that he is getting paid in dollars. Since the client is based in the US you need to fill out an IRS form called a W-8BEN which will stop them withholding 20% (?) for the IRS.
StevieBee said:
So a couple of things to keep in mind.
The first is to check that your bank accepts foreign currency payments. Any of the main ones will but if you bank with the Finetech banks (Starling, Monzo, Tide, etc.) then this isn't always possible. Never assume because if they pay your invoice and the bank bounces the payment back to the client, it can be a major pain to get the money repaid to you - and can take time.
Make sure that your invoice contains the international info the client will need to pay you - this will be the IBAN code and usually the SWIFT/BIC code as well.
Although you say this will only be small amounts, the exchange rate may still impact you. It would be worth you opening up a USD account with your bank or another bank. The Dollars arrive in that account and stay Dollars until such time as you move them to a GBP account. Doing that means you can manage exchange rates, moving the money over when the exchange rate is more favourable. There's also benefits in terms of bank charges in doing this.
This obviously assumes you don't need the money straight away. If that's the case, then you need to consider exchange rates in your pricing if you can.
Other than that, it's all pretty painless and simple.
Pretty much this. The first is to check that your bank accepts foreign currency payments. Any of the main ones will but if you bank with the Finetech banks (Starling, Monzo, Tide, etc.) then this isn't always possible. Never assume because if they pay your invoice and the bank bounces the payment back to the client, it can be a major pain to get the money repaid to you - and can take time.
Make sure that your invoice contains the international info the client will need to pay you - this will be the IBAN code and usually the SWIFT/BIC code as well.
Although you say this will only be small amounts, the exchange rate may still impact you. It would be worth you opening up a USD account with your bank or another bank. The Dollars arrive in that account and stay Dollars until such time as you move them to a GBP account. Doing that means you can manage exchange rates, moving the money over when the exchange rate is more favourable. There's also benefits in terms of bank charges in doing this.
This obviously assumes you don't need the money straight away. If that's the case, then you need to consider exchange rates in your pricing if you can.
Other than that, it's all pretty painless and simple.
I used to get paid in USD and it always worked out much better from a fees perspective to have it paid into a USD account and then change to GBP.
Are you going to be above the VAT threshold? There can be some complications if you are, so worth running past an accountant (rules may well have changed since I last did it).
Presumably from your description you'd be doing this as a Sole Trader, which means you really need some decent liability insurance in place in case anything goes wrong.
You might want to consider using an Umbrella company, they deal with the contract stuff and pay you as PAYE, obviously they take a cut in the process but it makes the admin a lot easier for you. Or if its something you plan to do quite a lot of it's cheap and easy to set up a limited company, which seperates you from any liability issues.
You might want to consider using an Umbrella company, they deal with the contract stuff and pay you as PAYE, obviously they take a cut in the process but it makes the admin a lot easier for you. Or if its something you plan to do quite a lot of it's cheap and easy to set up a limited company, which seperates you from any liability issues.
22s said:
Get a Revolut account (free) so you can receive the payments directly in USD without exchanging. If you need to exchange it in future, you can do so with a couple of taps in the app at the rate that will be much better than your high st bank
I have done this. Thanks for the suggestionStevieBee said:
So a couple of things to keep in mind.
The first is to check that your bank accepts foreign currency payments. Any of the main ones will but if you bank with the Finetech banks (Starling, Monzo, Tide, etc.) then this isn't always possible. Never assume because if they pay your invoice and the bank bounces the payment back to the client, it can be a major pain to get the money repaid to you - and can take time.
Make sure that your invoice contains the international info the client will need to pay you - this will be the IBAN code and usually the SWIFT/BIC code as well.
Although you say this will only be small amounts, the exchange rate may still impact you. It would be worth you opening up a USD account with your bank or another bank. The Dollars arrive in that account and stay Dollars until such time as you move them to a GBP account. Doing that means you can manage exchange rates, moving the money over when the exchange rate is more favourable. There's also benefits in terms of bank charges in doing this.
This obviously assumes you don't need the money straight away. If that's the case, then you need to consider exchange rates in your pricing if you can.
Other than that, it's all pretty painless and simple.
Many thanks. I don’t need the money now so will just stick it away for the time being. The swift/IBAN has come through with the revolution accountThe first is to check that your bank accepts foreign currency payments. Any of the main ones will but if you bank with the Finetech banks (Starling, Monzo, Tide, etc.) then this isn't always possible. Never assume because if they pay your invoice and the bank bounces the payment back to the client, it can be a major pain to get the money repaid to you - and can take time.
Make sure that your invoice contains the international info the client will need to pay you - this will be the IBAN code and usually the SWIFT/BIC code as well.
Although you say this will only be small amounts, the exchange rate may still impact you. It would be worth you opening up a USD account with your bank or another bank. The Dollars arrive in that account and stay Dollars until such time as you move them to a GBP account. Doing that means you can manage exchange rates, moving the money over when the exchange rate is more favourable. There's also benefits in terms of bank charges in doing this.
This obviously assumes you don't need the money straight away. If that's the case, then you need to consider exchange rates in your pricing if you can.
Other than that, it's all pretty painless and simple.
LooneyTunes said:
Pretty much this.
I used to get paid in USD and it always worked out much better from a fees perspective to have it paid into a USD account and then change to GBP.
Are you going to be above the VAT threshold? There can be some complications if you are, so worth running past an accountant (rules may well have changed since I last did it).
Vat I used to get paid in USD and it always worked out much better from a fees perspective to have it paid into a USD account and then change to GBP.
Are you going to be above the VAT threshold? There can be some complications if you are, so worth running past an accountant (rules may well have changed since I last did it).
Dunno anything about that. Will investigate ..
RizzoTheRat said:
Presumably from your description you'd be doing this as a Sole Trader, which means you really need some decent liability insurance in place in case anything goes wrong.
You might want to consider using an Umbrella company, they deal with the contract stuff and pay you as PAYE, obviously they take a cut in the process but it makes the admin a lot easier for you. Or if its something you plan to do quite a lot of it's cheap and easy to set up a limited company, which seperates you from any liability issues.
I don’t think I need to set up an umbrella company etc as it will be short lived and small numbers. Liability insurance is one thing that I have considered though. I think I will wait to see the exact contract terms. There is an NDA but I that is quite simple to adhere toYou might want to consider using an Umbrella company, they deal with the contract stuff and pay you as PAYE, obviously they take a cut in the process but it makes the admin a lot easier for you. Or if its something you plan to do quite a lot of it's cheap and easy to set up a limited company, which seperates you from any liability issues.
SchillingTwo said:
I m not sure if it s been made explicitly clear above, but you cannot receive USD into a standard GBP account, so don t try to fall back on that option if other routes seem to be too much bother.
The Revolut account seems to be able to do this as far as I can ascertain?Biglips said:
LooneyTunes said:
Pretty much this.
I used to get paid in USD and it always worked out much better from a fees perspective to have it paid into a USD account and then change to GBP.
Are you going to be above the VAT threshold? There can be some complications if you are, so worth running past an accountant (rules may well have changed since I last did it).
Vat I used to get paid in USD and it always worked out much better from a fees perspective to have it paid into a USD account and then change to GBP.
Are you going to be above the VAT threshold? There can be some complications if you are, so worth running past an accountant (rules may well have changed since I last did it).
Dunno anything about that. Will investigate ..
However, general professional and consulting services supplied to a US business are outside the scope of UK VAT, meaning you do not charge VAT.
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