Sixth consecutive rise, with levy rate tripling since 2011
Code of Practice also strengthened with power to name and shame
Thursday 5th December 2013
Andrew Seagren, financial services tax director at KPMG, commented:
“The bank levy has risen for the sixth successive time making the main rate now three times the initial rate introduced in 2011. However, Office for Budget Responsibility forecasts indicate that projected levy revenues remain unchanged from March 2013. The reality is that revenues have consistently undershot forecasts and the government is raising the rate to compensate.
“The bank levy is calculated as a percentage of a bank’s balance sheets. As balance sheets shrink, it is not surprising that revenues are lower than expected. The real concern is that the levy will fall increasingly on banks that do not shrink their balance sheet and are supporting the real economy by increasing lending.
“Also announced today is a list of banks that have signed up to the Code of Practice on the Taxation of Banks. HMRC will be encouraged that many banks have signed up. However, HMRC’s new powers to ‘name and shame’ where they perceive there to be non-compliance is causing concern, especially with inward investors. Time will tell whether the safeguards intended to prevent unwarranted reputational damage will work in practice.”
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Monica Fiumara, KPMG Corporate Communications
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