Tax on Swiss bank accounts? Ouch!
The UK has reached an agreement with Switzerland designed to prevent UK taxpayers illegally evading UK tax by hiding money in Swiss bank accounts. Either UK account holders must authorise full disclosure to the Revenue, or they must suffer a tax deduction imposed by the Swiss authorities on behalf of the UK.
From 2013 the Swiss authorities will deduct 48% tax from investment income and 27% tax from capital gains. The devil will lie in the detail, not yet published, but these are eye-watering rates. One is reminded of Denis Healey, as Labour’s Shadow Chancellor in 1973, predicting “howls of anguish” from the rich. (He is commonly misquoted as saying that he would squeeze the rich until the pips squeak, but he did not say that.) But this is a Tory Chancellor who is now provoking howls of anguish!
Howls of anguish? You’ve heard nothing yet! If you had a Swiss bank account on 31 December 2010 (and still have it on 31 May 2013) you will suffer a one-off tax charge in the range 19% to 34% of all your Swiss funds, to cover any arrears of income tax, capital gains tax, inheritance tax, and VAT that you may have evaded. Ouch!
What should you do? Well, if your funds are legitimate you may wish to authorise full disclosure. If you have underdeclared tax you may want to consider moving your funds to Liechtenstein. You may then qualify for the Liechtenstein Disclosure Facility, with the possibility of a lower tax rate. But whilst that facility may help some people, it will not help all.
Above all, you should take good professional advice.
