You must act now if you hold funds in a Swiss bank, as Switzerland has reached a novel settlement with the UK to protect its secretive banking laws and reduce tax evasion by UK residents.
Anyone who is a UK resident can open a bank account anywhere in the world and benefit from gross interest on their savings. The individual must declare the income received to HMRC so that they pay any tax due. If you don’t, this is tax evasion.
In addition, you cannot deposit untaxed business takings in an account and just declare the interest. Again, this is tax evasion.
The UK believes that untaxed income is held by UK residents in Swiss accounts, and to stop the problem the Swiss have agreed a unique deal with the UK.
From 2013, investment income from a Swiss account held by UK residents is subject to a 48% tax deduction at source. Capital Gains are subject to a 27% deduction.
This is similar to our current top rates of tax at 50% for income and 28% on Capital Gains.
This stops the problem going forward, but what about past periods? This is where the settlement is unique. The Swiss have agreed to make a one-off deduction of between 19% and 34% of the funds held within the accounts to cover past arrears of tax.
The deduction applies to accounts open at 31 December 2010 that are still open at 31 May 2013.
You can avoid the one-off deduction by authorising the Swiss to release details of the account to HMRC. The Revenue will then follow up on the disclosures to make sure that the correct tax has been paid.
Please contact us for help if you hold undeclared income in a Swiss account or you have undeclared income held anywhere else.
It is better to reach an unprompted disclosure to the Revenue rather than waiting for the knock on the door!