Budget 2015: Bank levy rate to increase to 0.21% from 1 April 2015

The bank levy was introduced in January 2011 and is payable on chargeable equity and liabilities of UK banks, banking groups and building societies; foreign banking groups operating in the UK through permanent establishments or subsidiaries; and UK banks and banking sub-groups in non-banking groups.

Since the levy was introduced the rate has been increased several times. Under Finance Act 2014, the rate had already been increased to 0.156% for short term liabilities (and 0.078% for long terms equity and liabilities) from 1 January 2014.

This measure further increases the rate of the bank levy to 0.21% for short term liabilities from 1 April 2015 (and 0.105% for long term equity and liabilities).

This measure is expected to bring in an additional £685m in 2015/16 and £925m in the following two years, and will be particularly felt by all UK headquartered banks. As expected, this further increase has already been criticised by the British Bankers Association, who stated that this “imposes a significant cost on banking businesses in the UK” and would further deter international banks from investing in the UK.