Salary / exchange rate change(11 Posts)
Hi all, I have quick question regarding salaries where you�re seconded to an overseas office. I was told that my salary would be the amount I was paid in sterling in the UK, but paid in the host country�s currency. It was set at the exchange rate at the time I started the secondment. Now, however, the exchange rate has increased in my favour - would you expect the salary to be re-pegged at the current exchange rate?
I�ve been told that it�s pegged at the average exchange rate for the previous 12 months. Which just so happens to be a lot less than now � about a 5% difference.
They�ve said that it protects me against any drop as well (clearly if the rate had dropped I wouldn�t be pushing for my pay to be re-pegged). But equally I have financial commitments in the UK and it�s costing me more each month to buy sterling.
My contract states that my rate of pay will be that provided by their bank at the time of payment � which to me means today�s exchange rate (clearly risky for me if it suddenly drops). Just want to know what the usual position is.
Sorry all - not sure what'a happened to the formatting in my post - seems to have replace apostrophe's for question marks!
When we had this working in Canada, being paid in CAD to UK bank acct, we took the gain/loss monthly on exchange.
I was there as "local" and when I converted my pay back I realised I was earning what I was 5yrs previous due to exchange rate. I did manage to get 18% in payrises over the next 2 yrs but was still 12% down based on currency. I had to eat it.
I think you have to put it out of your mind a bit, you'll tie yourself in knots. What is the local market paying, and is what you earn in line with that?
I asked to be paid in sterling as my main financial commitments were in the UK but it meant I lost out if the pound went down as I had less left over in my pocket.
Hi, thanks both. My pay is good for the local market so that's fine. It's just that I feel like I'm losing out as I have to convert part of my salary back into sterling and with a 5% difference it makes a difference. Also, at the moment I can see it going up more so the gap will become wider.
Also the main issue is in relation to a bonus I earnt while in the UK, was communicated to me as being in sterling but is now being paid in the local currency - at the lower rate. I don't need this for day to day living and had hoped to put to one side for school fees when we return the UK - but if it's paid in local currency then I lose out when I tranfser back.
I agree though to an extent I need to put it out of my mind as we're here for a few years.
Helpful to know what others are doing! Thanks both.
Your bonus should be paid in gbp, I think as it affect your NI and tax here in the UK as it was earnt here and calculated here and presumably appears on a payslip somewhere to do with your role in the UK. Your comoany will also pay tax on it to HMRC. There is an audit trail.
So it's a company decision ( an individual's) to convert it and send it to you. It's a process which can be changed as it's the whim of payroll who might not understand the tax implications. Say no, I want it in sterling into my sterling account. They can do that. They should.
Have you got an experienced tax accountant who is doing your tax returns? You should get one, especially as an seconded expat. Could save you loads.
DH has been offered a split into 2 bank accounts. So we are having living expenses paid local, and the balance paid in sterling.
Lots of expats tho. Not sure how many companies will split a pay packet.
He also has the better rate of last 3 YR average or current.
Yes the better of a 3 yr average or current makes sense. They're looking into whether they can pay in sterling but saying as they are now paying my salary and bonus then it has to come through the host office. Such a pain!! Have a tax consultant in the UK, not here.
Trouble is, then all the risk is with the company, and you get the better deal whatever happens. Think its difficult to get a balance that leaves everyone exposed to equalish levels of risk.
Is the exchange rate likely to go in your favour at some point before you leave? Can you keep anything not required in the UK in local currency, and transfer a larger amount when the exchange rate becomes more favourable? Mind you, if you could predict currency exchanges, I guess you'd have made your foutune by now!!!
I get that Desert, so difficult and should have been properly sorted before I started. Anyway, they've now confirmed that it will be paid in Sterling so that's good.
You can't win, really. We've had fluctuations from 2.48 down to 1.47. I can tell you it's a lot easier to pay a local mortgage when the rate is 2.48 lol.
It's just one of those things. Our income is sort of split, but we still have to bring money over for stuff, so are at the mercy of exchange rates for about a quarter of our income. Other than that, what we earn here stays here.
There are definitely people who watch the exchange rates and cash sterling cheques when it is favourable to do so (and the other way round). Ultimately I don't have enough money to have chunks available for playing the exchange rates, so we just deal with it.
Join the discussion
Please login first.