The Government has signed an agreement with Switzerland that will see UK taxpayers with funds in Swiss bank accounts pay 48 per cent tax on investment income, 40 per cent on dividends and 27 per cent on gains.
Under the terms of the agreement, existing funds held by UK taxpayers in Switzerland will be subject to a one-off deduction of between 19 per cent and 34 per cent to settle past tax liabilities.
People who have already paid their taxes will not be affected. Swiss banks have agreed to make an up-front payment to Britain of £385m.
From 2013, a new withholding tax of 48 per cent on investment income, 40 per cent on dividends and 27 per cent on gains will be introduced for UK residents with funds in Swiss bank accounts.
This will be accompanied by a new information-sharing provision which will make it easier for HMRC to find out about Swiss accounts held by UK taxpayers.
The agreement is expected to secure up to £5bn of unpaid tax for the UK exchequer by 2015. The charges will not apply if the taxpayer authorises a full disclosure of their affairs to HMRC.
Chancellor George Osborne says: “The days when it was easy to stash the profits of tax evasion in Switzerland are over.”
In February, HMRC unveiled the Liechtenstein disclosure facility, which offers an amnesty on funds held in offshore accounts around the world.
The arrangements mean that after full disclosure, a fine of up to 20 per cent of tax due will be levied instead of 100 per cent, with tax interest and penalties sought only for the previous 10 years rather than the previous 20 years.
PricewaterhouseCoopers tax partner Stephen Camm says: “The LDF is a better deal for UK taxpayers coming clean than the UK/Swiss treaty is likely to be although taxpayers have to give up secrecy under the the LDF, which they are not required to do under the UK/Swiss deal.”