UK and International Tax news
Bank Levy Update
Tuesday 22nd February 2011
Further to UK Tax News item of 6 January 2011, the Chancellor has recently announced an increase in the rate of the bank levy to be charged in 2011. This change will increase the revenue from the levy in 2011 by £800m to £2.5 billion.
The Government had previously announced that a reduced rate of 0.05% would apply in 2011, recognising the uncertain market conditions prevailing at the time but it now no longer considers this necessary.
From 1 January 2011 to 28 February 2011, the levy is 0.05% for short-term chargeable liabilities and 0.025% for long-term chargeable equity and liabilities.
For the two month period 1 March 2011 to 30 April 2011, the rate will be 0.10% for short-term chargeable liabilities and 0.05% for long-term chargeable equity and liabilities. The rates applicable from 1 May 2011 and for the rest of calendar year will be 0.075% for short-term chargeable liabilities, and 0.0375% for long-term chargeable equity and liabilities.
This increase in the rate of the levy will mean that, according to the Government, it will raise £2.5bn in 2011, the same as the target revenue for future years. Previously, the 2011 yield was forecast to be £1.7bn.
The rates for 2012 onwards will continue to be those set out in the draft Finance Bill clauses published on 9 December 2010.
If you would like further information on the above, please contact Keith Rushen on 0044 (0)20 7486 2378
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