The UK Treasury has released details of how the Swiss bank accounts of UK residents will be taxed. The formal agreement has to be approved by both parliaments and it is expected full details will be announced in the coming months.
The agreement confirms that the Swiss banks will offer their UK resident clients the option of disclosing their Swiss assets to HMRC or paying a flat rate tax for the past and a withholding tax on future income and gains. The clients who do not wish to disclose their Swiss assets will, in the main, have fulfilled their tax obligations to the UK authorities.
The flat rate tax will range from 19% to 34% of the value of the Swiss assets, depending on the amount(s) deposited into the Swiss bank and how long the relationship with the bank has existed.
The withholding tax will be 48% for income and 27% for gains. The tax will be deducted at source by the bank and paid over to the UK Government via the Swiss authorities, who have undertaken to police the procedures.
What does this mean for UK residents with Swiss assets?
HMRC wants UK residents to disclose their overseas assets, to the extent they are relevant to their UK tax affairs. As an alternative, HMRC has agreed to the Swiss banks acting as a tax collector while maintaining the anonymity of their clients.
Effectively, the agreement allows people to retain their privacy, at a cost. People with undeclared Swiss assets can take advantage of the Liechtenstein Disclosure Facility (LDF) to disclose their Swiss assets and put their affairs in order. Generally, the overall cost of voluntarily disclosing the assets to HMRC will be less than suffering the flat rate charge and withholding taxes under the agreement.
The LDF is a well-trodden path for sorting out undeclared overseas assets for all taxes.
How can we help?
We specialise in representing clients with overseas assets who wish to bring their tax affairs up to date. We can advise you and your clients on the best way of disclosing the assets to HMRC, minimising the tax liabilities for the past and for the future.
Please contact John Hood on 020 7182 4747 or via email on firstname.lastname@example.org for a confidential chat on how we can help you and your clients.