Monday, June 27, 2022

Money & Shopping in United Kingdom

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The currency used throughout the United Kingdom is the pound (£) (more correctly called sterling to distinguish it from the Syrian or Egyptian pound, but it is not used in common parlance), divided into 100 pence (singular penny) (p).

The coins appear in 1p (small copper), 2p (large copper), 5p (very small silver), 10p (large silver), 20p (small silver with square edges), 50p (large silver with square edges), £1 (small thick gold) and £2 (large gold) thick with a silver centre and a gold edge), while Bank of England notes come in £5 (green/light blue), £10 (orange/brown), £20 (blue) and £50 (red) and depict the Queen on one side and famous historical figures on the other. The size increases with the value. It is often best to avoid receiving £50 notes. £50 notes are often rejected by smaller establishments – they are unpopular because of the risk of counterfeiting and the amount of change that has to be given at reception. Note that the £1 gold coin, in use since 1983, will be replaced in 2017 by a new 12-sided bi-metallic coin (gold on the outside, silver in the middle) that is 0.75g lighter, 0.35mm thinner and 0.93mm wider than the old coin; the old coins will be withdrawn over a six-month period following the introduction of the new coin in March 2017.

Bank of England notes are widely accepted throughout the United Kingdom. Three Scottish banks (Bank of Scotland, The Royal Bank of Scotland and Clydesdale Bank) and four banks in Northern Ireland (Bank of Ireland, First Trust Bank, Danske Bank and Ulster Bank) issue their own banknotes with their own design. These notes have mostly the same denominations as the Bank of England notes, plus there are £100 notes. They are sometimes viewed with suspicion in England and Wales. However, these notes can be exchanged for Bank of England notes at any bank without charge. When leaving the UK, try to take only Bank of England notes with you as it can be difficult to exchange the rest outside the UK.

You may also hear the colloquial term “quid” for “pound”. It is both singular and plural; “three pounds” means “three quid”. Often people just say “pee” instead of “pence”. “Fiver” and “tenner” are common slang expressions for 5 and 10 pounds respectively.

Sometimes you can get into trouble if you try to pay for a small purchase with a £20 bill. Scottish and Northern Irish banknotes can also be difficult to spend outside these areas (see above); and in some cases you cannot pay with tickets at all (buses, for example, do not always accept them). When paying a bill (e.g. in a restaurant or hotel), any reasonable method of payment is usually accepted unless you have been informed beforehand. Travellers’ cheques in sterling may be accepted, but it is best to ask in advance.

Larger banks and post offices have bureaux de change (one of many examples of borrowing terms from English into French) that exchange most foreign currencies into books and vice versa, although they usually only accept foreign notes and not coins. Travel agencies and some department stores (e.g. Marks and Spencer) often have them too; and even small airports have at least one, although prices are often poor. It’s worth driving around the big cities to find the best rates. As ATMs in the UK accept foreign credit and debit cards, there is no need to bring large amounts of foreign currency with you anyway.


Opening a bank account is a relatively simple process, although proof of address is required. As most passports do not show your address, you should bring something that shows your address, such as a driving licence, ID card or bank statement from home. The “Big Four” retail banks in the UK are Barclays, HSBC, Lloyds Bank and the Royal Bank of Scotland (RBS).

ATMs, often known in the UK as cash points, cash dispensers or informally as ‘holes in the wall’, are widely available and usually dispense £10, £20 and sometimes £5 notes. They accept almost all foreign debit and credit cards. Travellers’ cheques can be exchanged at most banks. Beware: some non-bank ATMs (easily recognisable, sometimes kiosk-type, as opposed to fixed units in walls, and often in petrol stations and convenience stores) charge a flat fee for cash withdrawals, and your high street bank may do the same. On average, the cost is around £1.75 per withdrawal, but the ATM will always inform you of this and give you the option to cancel the transaction.

If you use an ATM, beware of fraud, which is becoming increasingly common. In this scam, your card is either “skimmed” (by reading the details on the card with a device attached to the machine) or it is jammed into the machine and recorded with a hidden camera when you enter your PIN. Never use an ATM with a card slot that appears to be tampered with and always cover the keypad with your hand, wallet or purse when entering your PIN. If you find an ATM that appears to be tampered with or if it withholds your card, report it immediately to the bank that owns it and to the police. For obvious reasons, ATMs located in bank branches are much less susceptible to this type of fraud than those located outside.

Credit and debit cards

Visa, MasterCard, Maestro and American Express are accepted in most shops and restaurants, although American Express is sometimes not accepted by small independent establishments and it is worth asking if in doubt, especially if queues are long. However, internet purchases from a UK-based merchant with a credit card sometimes incur a 2-2.5% surcharge, especially for overseas travel products (this is not so much the case with a debit card, even if it is a VISA or MasterCard). Since 14 February 2006, chip and PIN cards have become almost compulsory for cards issued in the UK. Customers in countries where credit cards do not have a chip are supposed to be able to sign instead of entering a PIN code, but it is advisable to have enough cash on you in case the merchant does not follow this rule or the machine has problems reading your card. If your bank issues a ‘contactless’ VISA or MasterCard, or if you have an ApplePay device linked to these cards, you can use them at some merchants instead of entering a PIN, although each transaction is usually limited to a maximum of £30.

There is usually no minimum amount for traders who have a national presence. Although most small shops and local pubs accept cards, there is often a minimum amount that must be spent (usually around £5). Any amount less than this minimum may be refused by the merchant, who may then charge a fee for processing the payment.


The high cost of basic things like transport, accommodation and food means that as a low-budget traveller you are likely to spend at least £50 per day. The cost of taxis, comfortable hotels and restaurant food is much higher than in most other European countries.

London and the South East in general are much more expensive for accommodation and other costs.


Locals generally only tip in certain situations. In many restaurants with table service, a “service tax” on your bill replaces the tip; in the absence of a service tax, a tip of around 10-15% is common. Tipping in cafés and coffee shops is less common. In many restaurants, the tip can be added to the credit card bill, but it is generally considered better to leave cash at the table. This is because cash should be given directly to waiting staff, while credit card payments and cheques are legally payable at the restaurant. While a tip given by credit card or cheque is almost always passed on to the waiters, it is legal for restaurants to pay their staff less than the minimum wage if the amount given as a tip by restaurant management raises their salary to the minimum wage level.

It is not customary to tip for drinks in a pub or bar, although offering a drink at the bar is considered acceptable and you can then take money for a drink’s worth (which is indeed tipping). Most of the time, the tip is offered by saying “and one for you” when you pay. If the pub is also a restaurant, you can tip the service staff.

In many restaurants with table service – and in “gastro-pubs” – a “service charge” is added to the bill, usually (but not always) if the group exceeds a certain size, for example six people, in which case a higher tip is not expected. It is helpful to check the menu for service charges at the time of ordering.

There is a legal obligation to show prices including all taxes and other charges. Additional service charges in restaurants are uncommon. If this happens, it is legal to refuse to pay the service charge, but people tend to do this only if they think the service was inadequate.

Taxis are not usually tipped, but passengers usually round up the fare to the next highest pound sterling. If you have a lot of luggage and the driver helps you carry it, a tip of £2 to £3 is usual.

Historically, tipping can be seen as an insult; it implies that the recipient can be bought or bribed and that the person giving the tip is ‘better than you’. This is the origin of the custom of offering a drink to the barman/barmaid in a pub. You would not tip a friend or co-worker, that would be an insult, but it is normal to offer a drink.

In some establishments, tips are retained individually by the waiter or waitress, while in others they may be pooled and distributed among all employees (a “trunk”). In other cases, tips may be set aside for other purposes for the benefit of the employees, e.g. to finance a staff party or a trip.

Tipping for other services such as taxis, pizza deliveries and hairdressers is not expected, but sometimes tips are given for particularly good service. Although it is common to tip taxi drivers and hairdressers in some big cities. In taxis it is customary to round up the fare to the nearest whole pound, even if this means a measly tip of 10 pence. For example, if the fare is £4.90, it is customary to say, “Make it £5, just to make it easier”.

Any attempt to tip a police officer, firefighter, nurse, doctor or other public sector employee would be considered an act of corruption and could be treated as a criminal offence.

Cigarettes and tobacco

Cigarettes are heavily taxed; over £7 for 20 cigarettes. 50g packets of rolling tobacco cost around £12. Imported brands such as Marlboro, Camel or Lucky Strike are usually the most expensive, as are well-known British brands such as Benson & Hedges and Embassy. Low tar cigarettes cannot be described as ‘light’, so terms such as ‘gold’ and ‘smooth’ are used. Most cigarettes are available in low-tar and menthol variants, and many brands also offer “superking” variants (100 mm long). The cheapest prices can be found in supermarkets at the customer counter. Almost all kiosks, supermarkets and petrol stations sell tobacco, and most also carry some brands of pipe tobacco and cigars. For a wider selection of tobacco products, most towns have at least one specialised tobacco shop. New laws now stipulate that tobacco products cannot be displayed.

The minimum age for buying tobacco products is 18. However, it is legal to smoke at 16. Guests who appear to be under 18 (and 21 or 25 in some places) may be asked to show identification to prove they are 18 or over (passports, driving licences and cards with the PASS hologram are accepted).

In some places there is a black market for imported cigarettes, which are much cheaper and can be offered to you in bars by people (rarely bar or supply workers). It is best to avoid this as it is an illegal trade.

Smoking is not permitted in any enclosed public space, with the exception of certain hotel rooms (please enquire at the time of booking). For the purposes of the smoke-free law, ‘enclosed’ is defined as a place with at least three walls and a roof, which may include features such as ‘open’ bus shelters. Smoking is also prohibited in railway stations. Penalties can include a £50 “on the spot” fine. Most pubs and nightclubs have smoking areas that comply with current legislation.


Although shopping in the UK can be expensive, it is generally considered a top destination for shoppers, both in terms of variety and quality of products, depending on where and what you buy. Fierce competition has driven down prices significantly in the food, clothing and electronics sectors. Prices vary and it is always worth visiting the various retail outlets as they often have good deals. Avoid shopping in tourist areas and stick to high street shops or the many retail parks outside the city where prices are much lower. The retail market in the UK is very competitive and many bargains are available all year round. In the electronics sector, for example, it is increasingly common to ask for a discount when making a purchase.

VAT (“Value Added Tax” – a compulsory tax levied on most transactions in the UK) is 20%, with reduced rates of 5% and 0% for certain categories (e.g. electricity is taxed at 5%, while uncooked food, children’s clothing and books are taxed at 0%). For street purchases, VAT is included in the displayed retail price.

Reclaiming VAT when leaving the EU
Many shops selling luxury or high-end goods have a blue “Tax-Free Shopping” sticker in the window. This means that you can reclaim VAT before you leave the country if you are leaving the European Union (not just the UK).

There are at least three major tax refund service providers that take exorbitant fees in exchange for the convenience of refunding at the airport: Global Blue in Slovakia +42 1232 111 111; Premier Tax [email protected] 0845 129 8993; (higher rate from mobile phones) and Tax Free [email protected] +44 20 7612-1560

However, these systems are inferior to the direct opportunities offered by the UK government’s VAT Form 407 process, when you can get the retailer to credit your card or bank account directly on receipt of this Form 407 countersigned by a customs authority.

Officially, any unused purchase made within the last three months may be subject to VAT reclaim if you have convinced the retailer to apply the VAT 407 scheme at the time of purchase, and
– you have a permanent residence in a non-EU country, or
– You have a residence in the EEA and leave the EEA for at least 12 months

At the airport, you will find the customs office and the “Blue VAT rebate” office in the free zone of the airport. There may be a queue, so plan enough time to complete the formalities before your flight.

Electronic items like computers and digital cameras may be cheaper here than in many European countries (especially the Scandinavian countries), but you can buy them anywhere. The internet is always a good way to evaluate the price of a particular item. You can also use it as a negotiating tool when you agree on a price with some of the biggest electronics stores. If you are from the United States, you may have to pay duties and taxes that make some of these purchases less advantageous, so shop carefully.

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