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Big banks face tax rise under bank levy reforms

Big banks face an increase in the bank levy under proposals to reform the tax which would see the introduction of a ‘banding’ structure.

In a consultation published yesterday, the Treasury is proposing to move away from the current system headline rates and introduce a banking approach which would determine banks’ levy according to their size.

Banks would be allocated into different bands according to their chargeable balance sheet equity and liabilities, with each band then corresponding to a pre-set charge.

Higher charges would be attached to bands that encompass the largest and riskiest banks.

The Treasury says the changes would make bank levy receipts more predictable and sustainable.

If the changes go ahead, they will be introduced at the report stage of the 2014 Finance Bill in early July, and come into force from January 2015.

The levy was intended to raise £2.5bn a year and has raised a total of £5bn since its introduction in 2011.

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