Budget: Banks hit by 8% tax charge on profits

Chancellor George Osborne says the government will “gradually” reduce the bank levy over the next six years.

After this the bank levy will no longer be applicable to worldwide balance sheets. However an 8 per cent bank surcharge on profits will be introduced from 1 January next year.

In the March budget the Chancellor increased the levy from 0.156 per cent to 0.21 per cent.

The British Bankers’ Association recently said the taxation of banks in the UK had neither prompted “domestic business investment” nor helped to “attract international investors”.

Britain introduced the bank levy in 2011 saying banks should make “a fair contribution” to the potential risks they pose to the financial system.

HSBC, Europe’s biggest bank, has been hardest hit by the levy in 2014, paying out £544m last year.