Many thanks
Can anyone tell me the Swiss tax situation with respect to premium bonds held in the UK? Presumably, they are subject to wealth tax, but what about any winnings. Are these treated as income, or (since they are free of tax in the UK) is this not the case?
No comments?
Just don't tell the Swiss.
Nick
It is a lottery. Prize money is not taxable.
You sure?
Subject to income tax, no?
But of course, don't tell the Swiss...
Haven't asked at the Swiss tax office (and won't) but I cannot see how prize money becomes taxable. It isn't income in the sense of a guaranteed rate of return. Certainly in UK it is not decalarable as income, so in the eyes of the 'giver' it isn't income, just prize money.
Reviving this old thing...
I've just moved from the UK and have some pitiful amount of premium bonds... but can still win a million right?
So would that be treated as lottery winnings by the swiss tax people or interest income?
having said that.. still better to have 650k left than 0k!
Winnings in the Swiss loto are taxed (at source), so in theory at least they're supposed to be declared.
As others have said, I wouldn't bother. If you win a million deal with the problem at that time.
Bump...thinking about using UK premium bonds as a store of some cash savings to avoid poor interest rates.
Anyone know if all returns would be classed as ‘income’ for tax purposes and just added to my other earnings, or if they would be handled by the tax authorities similar to lottery winnings or similar?
Eg according to https://www.baselland.ch/politik-und...ichem-vermogen according to my interpretation if classed as lottery winnings only individual ‘wins’ above 1000chf would be taxable?
If true this could be a nice way to earn some tax free returns as the likely individual prizes if any on my relatively small purchase would be £25/£500.
“ Profits from lotteries, sports betting and similar events are also taxable. The stakes spent on this can be deducted as costs. As of 2013, new lottery prizes will be exempt from withholding tax up to CHF 1'000.00. This exemption limit will apply from January 1, 2014 for both state and direct federal taxes. It will also apply now that 5% of the game prize, but no more than CHF 5,000.00, can be claimed as the cost of acquisition. Profits over CHF 1'000.00 are taxable without consideration of this exemption limit. ”
So personally, I hand my documents to a Truehand each year and they deal with it. Rightly or wrongly no winnings is declared, only the value on the 31 December. As far as I am aware this is then dealt with as wealth.
Unfortnuately I am in the situation where the winnings are 25 quid here and there, so year on year there is no major jump.
I guess if you won the million, you have bought yourself a little wiggle room and a couple of hundred to sit down with an advisor to get proper advise would be, in the grand scheme of things, a drop in the ocean.
Quick update after I contacted the Baselland tax office:
Winnings from premium bonds are taxable in the same way as income from other movable assets, eg dividends etc. Winnings are not taxed as lottery wins.
Incidentally they did say that a new law came in to force on 1st Jan 2019 stating that lottery winnings up to CHF 1m are exempt from income tax. Excess winnings above 1m (minus CHF 5000 cost allowance) are taxable as income.
Is there anything important to note if premium bonds are held in a childs name? I hold the full amount allowed for myself, but could have another premium bond account in my child's name.
I am just working out options to deal with the money held in a NS&I savings account where the interest rate has recently dropped considerably. The roughly 0.9% rate of interest / winners, without loss of principle, unfortunately is one of the better low risk options for savings out there at the moment I think.
It'll be taxed as your income. But probably less an allowance. Given the currency exposure, I'm not convinced that you'll get the rate of return in terms of Swiss francs.
Here's the GBP/CHF exchange rate since 1985, taken from fxtop.com.
The annual exchange rate loss from a Brit's perspective is ~2.7% over those 35 years, far less than the pre-tax 0.9% yield you'd get. Swiss wealth tax is comparatively negligible, too.
While all bets are off due to Brexit, recent years clearly say it'll be bad for the exchange rate going forward. As the saying goes "who doesn't learn from the past is bound to repeat it".
Not a recommendation , but could you just not declare them on your tax return and purchase them through a UK account? One would imagine that the chances of being caught are about as risky as the bonds themselves.
If you buy premium bonds for your child they become the child's and therefore not declarable in Switzerland.
Premium Bonds or any other NS&I savings are a terrible investment. Safety is the only benefit if you've got so much money that it can't go anywhere else.
I believe any win would be taxable in Switzerland but, of course, it varies by canton.
Yes, winnings are taxable - subject to some allowances. However, unlike with banks, there is no exchange of information between National Savings and the tax authorities, as they pay all winning by to a UK bank account, who in turn have to make the exchange of information.
Frankly, you've more chance of being hit by lightning than you have of winning the million, so I really wouldn't worry about it.
I've held my bonds since 1983 and the most I've ever won is £ 100 but still, bad investment or not, I continue to hold them as you never know!
Thanks for the feedback. I probably should have been clearer with my question. Rethinking, I suppose I was most interested in ownership issues and tax implications. The money is mine and therefore putting it in an account for my children am I likely to have issues "reclaiming" it back from them (they are both under 4)? I'm not intending to place it there long term.
I have slowly tried to lower my currency exposure. It's been a frustrating ride in this respect and I'm all too aware of the direction of the exchange rate in recent and more historical years. Perhaps I should just exchange the GBP as soon as I receive it in future. Only over time has it become clearer and clearer I won't be leaving Switzerland in my lifetime.
If anyone has an alternative investment that they would like to recommend I welcome suggestions. The core aim of this particular investment was protection of principle and low risk with any upside. Instant access with a time horizon of perhaps less than a year. I do already hold equity and fixed income ETF's and would be open to suggestions in this area if it fits those requirements.
History repeats itself.
It has to.
No one listens.
- S. Turner
You'd probably be better off keeping it in CHF as cash.
As for ideas on low risk - Smithson Investment Trust.