HMRC has announced an update to its draft guidance on the Bank Levy. The draft Bank Levy Manual, running to 189 pages, accompanies the draft Finance Bill 2011 clauses published on 9 December.
The levy on banks’ balance sheets, announced in the June 2010 Budget, is intended ‘to encourage banks to move to less risky funding profiles’.
The charge is based on the total chargeable equity and liabilities as reported in the balance sheet, and will apply for periods of account ending on or after 1 January 2011.
The rate is set at 0.05% for 2011 and 0.075% for 2012. There is no charge on the first £20 billion of chargeable equity and liabilities.
Mark Hoban, the Financial Secretary to the Treasury, said last week that the levy ‘means that banks will now make a full and fair contribution in respect of the potential risks they pose to the wider economy. This measure will also encourage banks to reduce their dependence on the riskier, short term funding that was one of the main causes of the financial crisis.’
The UK’s Bank Levy is different to the levies of other countries and to the proforma set out by the International Monetary Fund, Chris Sanger, head of tax policy at Ernst & Young, observed.
Writing in Tax Journal (20 December 2010), Sanger said: ‘The fact that the UK has chosen to design something that works specifically for its own environment shows that the idea that the global financial crisis would give rise to global taxes, and specifically the Tobin Tax, may have seen its chance pass it by.’
The government is also taking action to tackle ‘unacceptable’ bank bonuses, the Treasury said in a news release on 1 January. The Independent Commission on Banking will look at structural and non-structural measures to reform the banking system and promote competition, and the government is working with international partners to explore 'the costs and benefits of a Financial Activities Tax on profits and remuneration'.
HMRC has announced an update to its draft guidance on the Bank Levy. The draft Bank Levy Manual, running to 189 pages, accompanies the draft Finance Bill 2011 clauses published on 9 December.
The levy on banks’ balance sheets, announced in the June 2010 Budget, is intended ‘to encourage banks to move to less risky funding profiles’.
The charge is based on the total chargeable equity and liabilities as reported in the balance sheet, and will apply for periods of account ending on or after 1 January 2011.
The rate is set at 0.05% for 2011 and 0.075% for 2012. There is no charge on the first £20 billion of chargeable equity and liabilities.
Mark Hoban, the Financial Secretary to the Treasury, said last week that the levy ‘means that banks will now make a full and fair contribution in respect of the potential risks they pose to the wider economy. This measure will also encourage banks to reduce their dependence on the riskier, short term funding that was one of the main causes of the financial crisis.’
The UK’s Bank Levy is different to the levies of other countries and to the proforma set out by the International Monetary Fund, Chris Sanger, head of tax policy at Ernst & Young, observed.
Writing in Tax Journal (20 December 2010), Sanger said: ‘The fact that the UK has chosen to design something that works specifically for its own environment shows that the idea that the global financial crisis would give rise to global taxes, and specifically the Tobin Tax, may have seen its chance pass it by.’
The government is also taking action to tackle ‘unacceptable’ bank bonuses, the Treasury said in a news release on 1 January. The Independent Commission on Banking will look at structural and non-structural measures to reform the banking system and promote competition, and the government is working with international partners to explore 'the costs and benefits of a Financial Activities Tax on profits and remuneration'.
