The Government’s decision to increase the bank levy from 2012 will put UK banks at a long-term disadvantage, according to the British Bankers’ Association.
As part of this week’s Budget, Chancellor George Osborne announced the levy will rise from 0.075 per cent to 0.078 per cent from the beginning of 2012.
However this is lower than the current temporary rate of 0.1 per cent, which is in place until April 30. On May 1 it will fall to 0.075 per cent, where it will remain until December 31, 2011.
BBA chief executive Angela Knight says: “The levy can include business banks are doing outside the UK. Without satisfactory double-taxation arrangements, this puts banks operating in the UK at a long-term disadvantage.”
Knight says the move will hit UK banks internationally as they compete against those not paying a levy and domestically as other parts of the financial services sector will not face the levy.
The Government also announced corporation tax will be cut by 2 per cent from April 2011 and will fall to 23 per cent over the following three years.