HMRC and Treasury are consulting on changing the scope of the bank levy from a global balance sheet basis to a UK balance sheet basis. The changes would take effect from 2021. The proposal is that, from 2021, all banking groups will instead be levied on the balance sheet liabilities of UK based entities and on the balance sheets of any branches which operate in the UK. This would mean:

  • all UK resident companies within banking groups and sub-groups will remain in scope of the charge, including their overseas branches;
  • non-UK resident subsidiaries of a UK banking group or sub-group will be excluded from the bank levy’s scope;
  • the liabilities of a non-UK resident banking company that relate to the funding of a UK branch will remain within scope; and
  • entities within scope will be taxed on their liabilities to third-parties, and also on their liabilities to group members outside the scope of the charge. The government believes that UK resident companies should be charged on liabilities to group members that fall outside the bank levy’s scope, as well as their liabilities to third parties. This will align with the existing treatment for foreign banking groups.

Consultation closes on 4 March 2016. (Source: HMRC Consults on Bank Levy Changes)