Q&A: Setting up a sterling account for small UK pension

I expect to receive a small UK state pension in respect of a few years working in London in the 1970s. With sterling’s fall against the euro following Brexit, I would like to avoid further erosion of its value from currency conversion charges.

My Permanent TSB branch has told me I can open a sterling account only for deposits. Lodgements cannot be by EFT (electronic funds transfer) but only in cash or by cheque, and withdrawals cannot be by cheque or debit card but only in cash or by means of a bank draft, which could take several days to clear in a UK bank.

Are all banks the same in this respect and what do you think is the best way to avoid paying banks for handling small amounts of sterling while allowing it to accumulate and then spending it in Britain or Northern Ireland? Mr DL, Dublin

All the banks are definitely not the same in this respect. And if those are the sort of restrictions being imposed by Permanent TSB, that bank is effectively saying it has no interest in doing business with you by way of a sterling account.

Most of the UK banks operating in Northern Ireland, for example, allow Irish residents to open sterling accounts. As far as I can see, many will allow you to do so either in person or over the phone. A number even allow you do so from here, working through their branch network in the Republic.

Clearly, if you are operating over the phone, there will be correspondence to fill out and, in either case, evidence of identity such as a passport and utility bill showing your current address. It might also be no harm to bring bank statements from your current bank to show your ability to manage accounts.

The best thing is to touch base with the various NI banks by phone and see what their requirements are. AIB and Ulster Bank appear the more flexible. Bank of Ireland is also an option but you may have to travel to the North.

In relation to British-based banks, such as HSBC, Lloyds TSB and Barclays, they may be less inviting but if you are going to be in Britain more than Northern Ireland, it might be worth checking with them again by phone or letter/email.

As with any bank account decision, you need to familiarise yourself with the charges they will impose for account maintenance and withdrawals etc, to see which best suits your needs.

If you are travelling to set up an account in person, I’d certainly advise making an appointment as you may be disappointed if you simply show up off the street.

You should also check on any limitations they have. Some, for instance, require a minimum balance, which would hardly be appropriate for a small, regular UK state pension payment.

Any account you set up should be able to take electronic payments from the UK Department of Work and Pensions or anywhere else, and equally allow you to make electronic payments. You may find, being a non-resident, that they are more restrictive in terms of overdrafts and the like but it doesn’t sound like those are the facilities you’ll be looking for.

The bottom line is that there should be no real problem setting up such an account with a little forward planning. And, as long as you are travelling occasionally to a sterling area, it certainly might make sense given the current weakness of sterling and the impact that would have on transferring any funds into euro for lodgment to your current Irish account.

How many gifts of €3,000 can you receive in any one year, before incurring a tax liability, if any ? Ms SH, email

We’ve been over this ground before but it does seem to confuse people.

As I understand it, there is no limit. Technically, everyone in your parish (or further afield) could “gift” you €3,000 in a year with any tax liability.

Similarly, you could gift that same amount to any number of people without them incurring a liability. Clearly, the money you are giving them already comes from your after-tax income.

Now, in the real world, would Revenue start getting suspicious if they saw such large-scale transfers? Probably. They would certainly want reassurance that it was not some circular scheme to avoid tax. But if you were sufficiently wealthy to give out such sums to a large number of people, well and good.

Similarly, if you were fortunate enough to have friends with sufficient resources to each give you up to €3,000, that’s fine.

The one rule Revenue has is that the gift must be made to the person who is intended to benefit from it. So, if you get the money from a parent but it is really intended for your child who has already received a similar gift directly from your parent, and you pass it on to them, Revenue will determine (not surprisingly) that the child is the beneficiary of both gifts and the second one will be taxed.

As with everything in the tax code, the small-gift exemption works fine because it is not abused. It is intended to ensure that small sums do not trigger an obligation to report and account to tax authorities in a way that would hamstring the whole system.

If Revenue felt it was being abused, I have no doubt there would be a clampdown – a bit like we saw with another provision of the capital acquisitions tax code in relation to funding your children’s lifestyles.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice