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HMRC To Narrow Scope Of Bank Levy

by Jason Gorringe,, London

19 September 2017

The UK Government is planning to change the scope of the Bank Levy and simplify how it is administered.

On September 13, 2017, HM Revenue and Customs and the Treasury released "Bank Levy: changes to the scope and administration," fully explaining the changes that will be introduced in the Winter Finance Bill 2017.

The guidance states that, from 2021, the Bank Levy will be chargeable only on the UK balance sheet equity and liabilities of banks and building societies. HMRC said that, broadly, this means that overseas activities of UK-headquartered banking groups will no longer be subject to the Bank Levy.

In addition, various other changes and administrative simplifications to the Bank Levy will apply from 2018, including the process under which groups nominate a member to meet their Bank Levy obligations and to rules governing the shared liability of group members for Bank Levy amounts.

The new changes will also provide that the amount of UK equity and liabilities subject to the Bank Levy can be reduced in various circumstances, including where a UK bank holds certain types of "loss absorbing" investments in an overseas subsidiary, the guidance says.

This is happening alongside previously announced plans for an eight percent corporation tax surcharge on banking sector profits, which has applied from January 1, 2016, and a phased reduction in the Bank Levy rate between 2015 and 2021.

The Bank Levy was introduced in 2011 to ensure that banks and building societies make a fair contribution, reflecting the risks they pose to the financial system and the wider UK economy.

TAGS: tax | investment | banking | corporation tax | United Kingdom | regulation | Tax

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