UK and Switzerland have struck a historic deal, which will see over 15,000 Britons with Swiss bank accounts pay billions extra in tax.
Under the landmark agreement, which was thrashed out yesterday afternoon, the Swiss government will impose a so-called withholding tax on the interest earned by all British depositors.
It will hand over the revenue, which is expected to total billions of pounds, to the British exchequer.
Because the Swiss authorities will collect the tax, rather than the British, the identity of account-holders will remain anonymous.
Sources close to the negotiations stressed that a tax rate had not yet been set, but suggested it would likely be between 40 per cent and 50 per cent.
The British government is also pressing the Swiss to impose a withholding tax on interest earned in the past, although this more controversial measure has not yet been agreed.
George Osborne made the agreement with Switzerland’s finance minister Hans-Rudolf Merz after a day of negotiations yesterday.
Aides to the chancellor said he had decided to cut a deal that would provide the UK with an immediate revenue boost, rather than embarking on a lengthy process of identifying and prosecuting individuals.
It is not yet clear how much revenue the measure will raise, although tax experts said it would likely be several billions of pounds. There is said to be around £125bn of British assets held in Swiss bank accounts.
George Bull, head of tax at Baker Tilly, estimates there are “upwards of 15,000” Britons with Swiss bank accounts, although he cautioned it was very difficult to judge due to the country’s secrecy laws.
A similar agreement with Lichtenstein, which has far fewer British bank account holders, is expected to net the Treasury £1bn.
John Whiting, head of the Office of Tax Simplification, said the agreement was “unlikely to close the whole deficit” but said it was welcome because it could boost future revenues.
He added: “What this is saying is you can’t squirrel away revenue from the taxman. It will undoubtedly be a powerful deterrent to people thinking of trying to do so in the future.”
Meanwhile, Switzerland has also agreed to work more closely with the British authorities in identifying people practising tax evasion. If the UK government approaches it with the name of a suspect, it will now confirm whether or not they hold an account.