British taxpayers with Swiss bank accounts could soon be forced to pay tax on the interest they earn on their savings.
The Treasury is holding talks with the Swiss government over exchanging information to ensure that account holders pay the right amount of tax.
The Government is asking Switzerland to give HM Revenue & Customs more details on accounts held by British taxpayers, Treasury sources said today.
Switzerland has strict laws under which it will not give details on account holders with its banks, unless HMRC can provide a name and say with which bank an account is held.
The law forbids automatic information exchange, under which other countries, such as France and the US, send complete information to HMRC on accounts held by British taxpayers.
A Treasury source said: "Ministerial negotiations have started between the Swiss and UK Government with the aim that UK residents with Swiss bank accounts pay tax on the interest they earn."
The Treasury is also thought to be asking Switzerland to levy a so-called withholding tax on future interest British taxpayers earn.
The negotiations will also seek to find an agreement on how much tax should be paid on interest already earned.
Treasury sources said the talks were at an early stage, and it is not yet known how much revenue may be raised as a result of them. Germany is understood to be holding similar negotiations.
An agreement between the UK and Liechtenstein, which covers a far smaller number of accounts, is expected to raise £1 billion.
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