Wednesday 21 March 2012
Commenting on today’s announcement that the bank levy will increase from 0.088 % of banks’ balance sheets to 0.105%, Tom Aston, financial services tax partner at KPMG commented:
“For the fourth time, banks are being hit with another increase in the bank levy. It is surprising that the yield estimates keep being revised downwards so sharply, and that the tax has risen so many times. Predicting bank levy liabilities has become very difficult for banks who are trying to plan ahead.
“The recent UK bank results highlighted the negative impact the levy has had on banks’ financial results and this increase will no doubt continue to make a dent in profitability. At a time where the more international focused banks are already outperforming UK focused ones, today’s increase may prompt banks to again reassess the attractiveness of operating in the UK.
“Once again there are concerns that the government’s desire to maintain an annual bank levy take of at least £2.5 billion may create the wrong incentives for bank lending. If banks shrink their balance sheets then they will pay less bank levy, but typically at the same time they will be lending less to the economy. The banks who maintain their lending are being asked to pick up the bill for those who lend less. UK banks who remain here must also be worried that they will be asked to pick up the bill for any large banks who decide to leave the country.”
Ends
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KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.
