Budget Resolution 28 — Bank Levy — 28 Nov 2017 at 18:48

The majority of MPs voted to narrow the scope of the bank levy tax so it is calculated only on the basis of a bank's UK assets; excluding overseas activities of UK headquartered banking groups from the charge.

The motion supported by the majority of MPs in this vote was:

• That provision may be made amending Schedule 19 to the Finance Act 2011, including (notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills) provision taking effect in a future year.

Support for this motion enabled the proposed changes to the bank levy included in the budget documents to continue on their path to becoming law.

The "Overview of Tax Legislation and Rates"^[3] which was published among the budget documents stated:

• As announced at Summer Budget 2015 and confirmed at Autumn Statement 2016, the government will change the bank levy’s scope so that UK headquartered banks are levied only on their UK balance sheet liabilities. Minor changes will also be made to the administration of the bank levy.

In the Summer Budget speech in 2015^[4] the chancellor, then George Osborne, said:

• Our bank levy was introduced to raise revenue and increase the stability of balance sheets, and it’s worked – but now it risks doing harm unless we change it.
• So I will, over the next 6 years, gradually reduce the bank levy rate – and after that make sure it no longer applies to worldwide balance sheets.
• But to maintain a fair contribution from the banks, I will introduce a new 8 percent surcharge on bank profits from the 1st January next year.
• By getting this balance right, it means we’ll actually raise more from the banks this parliament, but at the same time make our country a more competitive place to do business.

The Explanatory notes to proposed legislation amending the bank levy^[5] state:

• For periods of account ending on or after 1 January 2021, bank levy will be chargeable only on equity and liabilities recognised on the UK balance sheets of banks and building societies.

The main budget document the "red book"^[6] stated bank levy income of £3bn in 2016-7 was forecast to drop to £1.3bn by 2022-23. Tax-take from the bank surcharge was forecast to rise only from £1.6bn to £1.9bn over the same period.

The bank levy was introduced by Schedule 19 of the Finance Act 2011^[7]; it raises an annual tax on banks calculated as a fraction of their total applicable liabilities and equities^[8].

• [1] Budget Documents, Autumn Budget 2017
• [2] Budget resolutions, Resolutions to be moved by the Chancellor of the Exchequer, Wednesday 22 November 2017
• [3] Overview of Tax Legislation and Rates, Budget Document, 22 November 2017
• [4] Chancellor George Osborne's Summer Budget 2015 speech, UK Treasury, 8 July 2015
• [5] Explanatory notes to proposed legislation amending the bank levy
• [6] UK Treasury, Budget "Red Book", Autumn Budget 2017
• [7] Parliament's webpage on the Finance Bill 2013
• [8] Schedule 19 of the Finance Act 2011 which provides for the bank levy

Debate in Parliament |