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HMRC internal manual

International Manual

HM Revenue & Customs
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Clearance under the agreement: Amounts not cleared: Tax obligations not cleared (the future)

In respect of the future, individuals who elect to incur withholding tax on any income or gains arising in Switzerland will either be able to treat the tax withheld as clearing their UK liability on those amounts or to treat the tax as a payment on account in respect of their total UK tax liability for the relevant tax year.

Clearance will apply unless an individual opts for the payment on account treatment.

Where clearance is applicable the individual will also cease to be liable to any amount of interest, penalties or surcharge in respect of the Swiss income or gains.

Although clearance will not apply if an individual opts to treat the tax withheld as a payment on account, in these circumstances any of the tax withheld which exceeds an individual’s UK liability on the Swiss income or gains will be available to be set off against other UK tax liabilities of the same tax year. In addition, if an excess of tax withheld remains after any set off, this can be repaid.

In order to treat the tax withheld as a payment on account, an individual must include an appropriate election within their annual Self Assessment return. As well as including details of all relevant Swiss income and gains in the normal way, the return must be accompanied by the withholding tax certificates received by the individual at the end of the tax year. Further information on certificates is available at INTM820600.

There are also limited circumstances where income arising on an individual’s Swiss assets may affect their UK liability in other areas. Tax credits, the High Income Child Benefit Charge and the income limit for the annual personal allowance are all examples of situations where an individual’s total income, including sums cleared under this part of the agreement, is relevant in determining the extent of any UK tax charge.

Individuals affected by the agreement will need to take appropriate account of these, or any similar considerations, in order to ensure that they make an accurate Self Assessment return of their UK tax liability in the future.