As a sign of the current economic (and indeed political) environment, 2010 will be remembered by the UK banking sector as the year in which banks were asked to contribute a far greater share to the UK tax take. Although it was initially feared that the investment funds sector might be affected by the one-off Bank Payroll Tax (BPT) (payable on 31 August 2010), the UK Government subsequently narrowed the scope of the tax to apply only to retail banks, investment banks, building societies and genuine banking groups.
Similar concerns were raised in July 2010 when the UK Government announced its plans for a ‘Bank Levy’, effective from 1 January 2011. Although the draft legislation for the Bank Levy applies the same definition of a “bank” as used in the BPT legislation (with the result that standalone asset managers should not fall within the scope of the levy), there remains a concern that liabilities and equity of an asset management sub-group of a banking group would be brought within the charge of the levy.
In addition, the UK Government announced in 2010 that it would explore the costs and benefits of a Financial Activities Tax (FAT). If enacted, this may impact on asset managers and could be expected to be levied on the sum of the profits and remuneration of financial institutions.