A growing number of people in the UK have income arriving from somewhere else.
A salary or consultancy income earned overseas. A pension from a previous career abroad. Rental income from a property in Spain, France or Portugal. Dividends from a foreign company. Proceeds from selling an asset. An inheritance from a relative in another country.
In almost every case, the money arrives, the bank converts it, and nobody reviews what that conversion cost.
Over years, on a regular income, that's a meaningful amount of money that was never an invoice and never an expense.
What automatic conversion actually costs
When foreign currency lands in a sterling bank account, the bank converts it at a rate it sets, on the day it arrives, with a margin built in.
On personal accounts and smaller amounts, that margin is frequently wider than on business payments — commonly somewhere between 2% and 4% away from the mid-market rate, sometimes more on less common currencies.
On €3,000 of monthly rental income at 3%, that's roughly £900 a year. Over a decade of ownership, close to £9,000 — on money you'd already earned, paid tax on somewhere, and simply wanted to move.
And unlike a fee, nothing appears on a statement. The amount that arrives is just slightly smaller than you expected, every time.
Three ways to improve it
1. Receive in the original currency. Hold a euro or dollar balance rather than converting on arrival. You then convert when it suits you, in larger amounts, at a rate you've seen before agreeing to it.
Larger, less frequent conversions are almost always better priced than small monthly ones.
2. Don't convert what you'll spend abroad. This is the one most people miss. If you receive euro rental income and pay euro costs on the same property — management fees, service charges, local taxes, insurance, maintenance, a local mortgage — pay them from the euro income directly.
Converting euros to sterling and then buying euros back to pay a service charge is a round trip costing a margin in both directions, on money that never needed to leave the currency.
3. Use a target rate where timing is flexible. If you're repatriating a lump sum — sale proceeds, an inheritance, a pension commencement amount — and you don't need the money on a specific day, a limit order executes automatically if the market reaches a rate you've specified. No obligation, no cost if it doesn't get there.
For larger sums, protecting a worst case with a stop-loss alongside it defines a range rather than leaving the outcome open.
Where the amounts get serious
Three situations where this stops being a few hundred pounds a year.
Selling a property abroad. A €400,000 sale is a single conversion where a 3% difference is £10,000. The timing between agreeing a sale and completing is also a real exposure — the same problem buyers face, in reverse. Our piece on buying property abroad covers the mechanics.
A lump sum pension or settlement. Large, one-off, and frequently converted in a hurry because the money has arrived and nobody planned for it.
Regular income over many years. The amounts are individually small and the cumulative figure is large. This is where reviewing the arrangement once pays for a long time.
Practical points
Correspondent deductions. International wires can be reduced by intermediary banks before they reach you. If the amount arriving is consistently less than the amount sent, that's where it went. Local receiving arrangements avoid it.
Reference and purpose information. Payments from some jurisdictions are held pending documentation about their source. For inheritance, property proceeds or large one-off receipts, having the supporting paperwork ready prevents delays.
Tax is a separate question. Receiving income from abroad may have UK tax consequences depending on your residence and domicile position, and the rate used for tax reporting purposes may differ from the rate you actually achieved. That's a question for an accountant, not for us — but it's worth asking before a large repatriation rather than afterwards.
The simple check
Find one recent payment from abroad. Note the date, what was sent, and what arrived.
Divide one by the other. Compare it against the mid-market rate for that date on XE or any rate site.
The difference, multiplied by how often that payment arrives, is what your current arrangement costs you a year.
Most people have never done that calculation. It takes two minutes and it's usually the most surprising two minutes of anyone's financial admin.
William Fuller, Co-Founder of Orbis Exchange Group contact on 0203 918 5622
Ben James, Co-Founder of Orbis Exchange Group contact on 0203 918 5621