Yesterday, the UK Treasury announced the publication of draft legislation which would introduce a permanent levy based on banks’ balance sheets. The bank levy would only apply for banks with net assets in excess of £20,000,000,000, and is intended to incentivize banks to adopt less risky funding strategies.

The UK government expects the bank levy to generate around £2.5 billion of annual revenues by 2013.

The British Banking Associated responded to the draft legislation with a statement explaining their concern that the “bank levy applies not only to UK banks but also to the more than 200 overseas banks operating in this country.”

The British Banking Association also warned that "[t]he Treasury’s statement is largely silent on how this levy would interact with taxation in other countries. Until this is clearer, some banks could be taxed multiple times by multiple jurisdictions on the same activities.”