Offshore savers could face tax on income

Industry experts forecast account holders with savings in tax havens such as Guernsey and the Isle of Man could be forced to pay tax on their offshore income to fund a government-backed deposit protection scheme.

'I would not be surprised if we saw a tax levy on income from offshore bank accounts as the quid pro quo for granting some level of protection, such as guaranteeing a certain level of cash deposits,' Andrew Jupp, Tenon head of tax, told The Times. 'The Treasury could try to strike a deal with overseas banks to ensure a certain amount of interest is withheld at source.'

The measure is expected to result from the government review of offshore financial centres, which got under way last week, coming after thousands of British savers lost money in offshore accounts owned by Icelandic banks this year.

The review, led by Michael Foot, former Financial Services Authority managing director, covers Jersey, Guernsey, the Isle of Man, Bermuda, the Cayman Islands, Gibraltar, the Turks and Caicos Islands, the British Virgin Islands and Anguilla, but not Luxembourg, and is likely to examine ways that offshore investors and savers evade UK tax.

Further reading:

Regulation can tackle havens, says review chief

Offshore tax havens: crackdown

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