Tax avoidance by wealthy UK residents through tax havens costs UK tax payers at least £4 billion a year, according to new research published today (Sunday) by the TUC.
Tax avoidance by wealthy UK residents through tax havens costs UK tax payers at least £4 billion a year, according to new research published today (Sunday) by the TUC.
The TUC research is the first ever analysis of the role of individual tax havens in tax lost to the UK. It shows that most of the loss to tax havens is caused by Jersey, Switzerland, the Isle of Man and Guernsey.
Under the EU’s Savings Tax Directive, UK residents who hold off-shore bank accounts in tax havens could either declare all their interest to HMRC or opt to have 15 per cent tax withheld from the interest payments by the tax haven where they hold their account.
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Three-quarters (75 per cent) of this is then paid to the UK government, with the rest being retained by the government of the tax haven. This makes the effective UK tax rate on such off-shore accounts 11.25 per cent, rather than the 40 per cent that would be paid if the money was held in the UK in the period the research covers.
An analysis of figures given in a recent parliamentary answer of the sums involved by TUC tax consultant Richard Murphy has produced the first ever estimates of how much UK tax payers lose through such off-shore accounts, and the amount lost in each of the tax havens.
The figures show that over the last three years the total tax lost was £319 million on a total income from such accounts for their holders of £1.1 billion. Most money was lost over the period reviewed through accounts in Jersey (£94 million), Switzerland (£72 million), the Isle of Man (£68 million) and Guernsey (£47 million).
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