The new tax agreement between the UK and Switzerland will let UK taxpayers keep Swiss bank accounts out of sight of HM Revenue & Customs, but they will suffer a withholding tax of up to 48% from 2013.
People who have not paid tax on their Swiss investments in the past will also suffer a one-off deduction of about 19% to 34% of the account’s value, depending on the age of the account and the amounts withdrawn since 2003. Alternatively, they will be able to avoid the charge by disclosing their tax liabilities.
Non-domiciled individuals, whose offshore income might not be wholly liable to UK tax, can opt out of the initial charge on their whole account by self assessing their liability, which will then be taxed at 34%. There is no special opt-out from the withholding tax.
The agreement only covers UK tax liabilities. The US has adopted a different approach and non-domiciled individuals who are US citizens will still have to pay US tax on the whole of their income. From 1 July 2013, all foreign banks will have to disclose information about accounts held for US citizens or businesses, otherwise they will face financial penalties and sanctions on their operations in the US.
