Summer Budget 2015: Bank levy rate deduction

The bank levy 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 its introduction, the levy has increased several times. The current rate is 0.21% for short term liabilities (and 0.105% for long term equity and liabilities).

From 1 January 2016, the rate will decrease to 0.18% for short term liabilities (and 0.09% for long term equity and liabilities).  This rate will continue to decrease on a phased basis, so that by 1 January 2021, the rate will be 0.10% for short term liabilities (and 0.05% for long term equity and liabilities).

The loss to the Treasury due to the reduction in the rate is expected to be more than offset by the 8% Corporation Tax Surcharge for banks that was also announced today. Importantly, while the Bank levy is charged on global balance sheets, the new surcharge is only chargeable in respect of UK businesses.  This change of approach by the Government may well be in response to several banks threatening to move their global headquarters out of the UK.