£40bn held in Swiss bank accounts by UK taxpayers

The government admits it may not be able to pin down who owns all the money in Swiss banks

An estimated £40bn is being held in Swiss bank accounts by UK taxpayers.

The estimate, the first to be published, is contained in the documents accompanying the Autumn Statement.

A breakthrough tax agreement with the Swiss government comes into force on 1 January 2013.

It is hoped that this will flush out £5.3bn in extra tax over the next six years, from UK citizens who have been hiding money in Swiss bank accounts.

"I am staggered at the sums, it is a huge amount of money, absolutely enormous," said Ronnie Ludwig at accountants Saffery Champness.

"It makes me wonder how much is stashed away in other tax havens."

'Significant step forward'

The deal with the Swiss government was first struck in August 2011.

The country has, until recently, been one of the world's top tax havens with a long tradition of total secrecy for its banks' customers.

This has crumbled under international pressure in the past two years.

The UK's deal will see the Swiss government make a payment of half a billion Swiss francs, to cover past unpaid taxes due to the UK.

"This is the largest tax evasion settlement in UK history, marking a significant step forward in the battle against those who seek to evade UK tax," said the Treasury.

In addition, on behalf of the UK tax authorities, the Swiss government will collect:

• A one-off levy on existing Swiss assets owned by UK residents, worth between 21% and 41% of the assets

• A withholding tax on future income and gains, at rates ranging from 27% to 43%

• A 40% per cent inheritance tax on Swiss assets for UK investors.

The UK government admits it may not be able to pin down who, exactly, owns all the money in Swiss banks, and also expects some of the assets to be moved.

So it thinks the amount that will be taxed will in fact be £25bn.

"An adjustment has also been made to account for identification failure," the Treasury admits.

There is, however, a word of warning: the deal may require a referendum of the Swiss people to ratify it.

"The final stage of the ratification process is expected to be concluded shortly, but there remains a possibility that the Swiss government will have to hold a referendum on the agreement," says the Treasury.

"This is therefore a significant fiscal risk to the forecast."

The Treasury also added: "The estimated revenue raised by this measure is also highly uncertain as there is little hard information about the value of UK individuals' financial assets in Switzerland, and how these individuals will respond to the policy."