Get ready for the Economic Crime Levy
Updated 29 April 2024
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The Economic Crime Levy (ECL) is an annual charge that affects entities (organisations) who are supervised under the Money Laundering Regulations (MLR) and whose UK revenue exceeds £10.2 million per year.
Prepare for the ECL
Affected HMRC-supervised entities will have to:
- register for the ECL
- submit a return every year
- pay a fee every year
Not all entities have to register and submit a return — it depends on who your collection authority is.
It is important to understand who your relevant collection authority is.
You will then be able understand the ECL process for your relevant collection authority including, if necessary:
- how to register for the ECL
- how to submit your ECL return
You should also understand how to pay the levy, particularly which ECL band you fall into so you can calculate the fee you must pay.
How the ECL will be collected
The ECL is collected by 1 of 3 collection authorities:
- the Financial Conduct Authority (FCA)
- the Gambling Commission (GC)
- HMRC
Each of those bodies has responsibility for supervising businesses in certain sectors of the economy for the purposes of preventing money laundering and is responsible for collecting the levy from them.
You only need to provide information to, and pay, one collection authority, even if you are supervised under MLR by more than one supervisor.
If you are supervised only by HMRC, or by one of the 22 professional body supervisors (listed in the annex), you must register with and pay ECL to HMRC.
If you are supervised by either the FCA or the GC, you must follow their ECL process. You must do this even if HMRC also supervises some of your business activities.
This information and guidance is only for those whose collection authority is HMRC.
Registering for the ECL
Who must register
Entities are the legal person or persons that have potential liability to ECL. This incudes individuals, companies, LLPs or the responsible partners in a partnership.
Entities must register online with HMRC for the ECL if you are:
-
supervised by HMRC for MLR at any time in the financial year, or you are supervised by one of the professional body supervisors listed in the Annex for MLR at any time in the financial year
-
not supervised by the FCA or the GC for MLR, and your UK revenue is equal to or greater than £10.2 million in the financial year (pro-rated)
You only need to register for the ECL once, but you will need to submit an online return and pay the ECL every year that your UK revenue exceeds the threshold.
If you are supervised for MLR by the FCA or the GC, you need to follow their ECL processes. Do not register to the ECL with HMRC, submit yearly ECL returns to HMRC, or pay the ECL to HMRC.
After you register for the ECL with HMRC, you will be provided a reference number starting with ‘X’.
Tax agents
Your Tax Agent will not be able to register you for the ECL — you must register yourself for the ECL.
How to register
To pay ECL to HMRC, you will need to register your business before declaring and paying your liability.
You must register using the HMRC online ECL Service.
You will be given an access code to enable you to complete the registration process.
Business groups
Where an entity is part of a group of companies, the ECL will only apply to entities in your group who meet the requirements. Each group member who meets the requirements must register, submit yearly returns and pay separately.
Partnerships
Where the person liable to pay the levy is the responsible partners of a partnership, the nominated partners must make an economic crime (anti-money laundering) levy return in the name of the partnership.
Submitting a return
You can complete and submit returns online to report:
- the length of your relevant accounting period
- your UK revenue for that accounting period
- whether you stopped or started MLR-regulated activity in the previous financial year
- your ECL band and amount due
If you have registered for the ECL, you should submit returns on a yearly basis, even if you do not meet the threshold for paying the ECL in that year.
You must submit a return by 30 September each year.
Find out more information about submitting a return for the Economic Crime Levy.
Paying the ECL — bands and fees
After you have submitted your return you will be able to pay your ECL liability online in the same way as you normally pay your tax liability.
When you need to pay
You must pay the ECL by 30 September each year.
This payment will cover the period of the previous financial year. The amount payable will be determined by reference to your size based on your UK revenue from the accounting period ending in that year.
For example, the ECL will be charged on entities that are supervised for MLR at any time during the financial year from 1 April 2022 to 31 March 2023. The payment for this period will be due on 30 September 2023.
If you do not pay by 30 September HMRC will charge interest on the ECL and you may have to pay a penalty.
Bands
The ECL will be paid as an annual fixed fee. This will be determined by the band your MLR-supervised entity sits, based on your UK revenue in the accounting period ending in the previous financial year.
There are 4 band sizes:
| ECL band size | UK revenue |
|---|---|
| Small | under £10.2m |
| Medium | £10.2 million to £36 million |
| Large | £36 million to £1 billion |
| Very large | more than £1 billion |
UK revenue is calculated for the relevant accounting period that ends within each financial year.
UK Revenue includes your turnover for that period and any other amounts, not included in turnover, which, in accordance with UK GAAP, are recognised as revenue in your profit and loss account or income statement for the accounting period.
This is your entire UK revenue in accordance with UK GAAP, it is not simply the turnover of the activity supervised for MLR.
Levy amounts
| ECL band size | ECL fee |
|---|---|
| Small | No ECL liability — not required to register with HMRC |
| Medium | £10,000 |
| Large | £36,000 |
| Very large | £250,000 |
Reduced or partial accounting periods
The amount you need to pay may be reduced if you carry out regulated activities for only part of the financial year. This reduction is calculated using a daily apportionment of the time you are supervised for MLR.
If there are no accounting periods ending within the financial year, the relevant accounting period is taken as the accounting period that ends within 3 months of the end of the financial year. This will only affect new businesses who start during a financial year where their first accounting period ends between April and June.
If your accounting period is shorter than 12 months, the ECL band sizes are adjusted accordingly. This apportionment is calculated using days.
Further information and guidance
HMRC has published guidance on the ECL on GOV.UK:
- Check if you need to register for the ECL
- Register for the ECL with HMRC
- Submit ECL returns to HMRC
- Pay the ECL to HMRC
- Claim an ECL refund
The Financial Conduct Authority (FCA) and Gambling Commission (GC) have published their own guidance on the ECL. If either the FCA or GC are your collection authority, you should follow their guidance.
Annex
List of professional body supervisors
HMRC is responsible for collecting the levy from qualifying entities who are supervised by one of the 22 professional bodies listed below:
- Association of Accounting Technicians (AAT)
- General Council of the Bar of Northern Ireland
- Association of Chartered Certified Accountants (ACCA)
- Insolvency Practitioners Association (IPA)
- Association of International Accountants (AIA)
- Institute of Certified Bookkeepers
- Association of Taxation Technicians (ATT)
- Institute of Chartered Accountants in England and Wales (ICAEW)
- Chartered Institute of Legal Executives (CILEx)
- Institute of Chartered Accountants in Ireland (ICAI)
- Chartered Institute of Management Accountants (CIMA)
- Institute of Chartered Accountants of Scotland (ICAS)
- Chartered Institute of Taxation (CIOT)
- Institute of Financial Accountants (IFA)
- Council for Licensed Conveyancers (CLC)
- International Association of Bookkeepers (IAB)
- Faculty of Advocates
- Law Society
- Faculty Office of the Archbishop of Canterbury
- Law Society of Northern Ireland
- General Council of the Bar
- Law Society of Scotland