BKLM140000 - Introduction: background to the bank levy

The Chancellor of the Exchequer announced in the June 2010 Budget the introduction of a bank levy to apply to UK banks and building society groups, foreign banks and banking groups operating in the UK and UK banks in non-banking groups for periods of accounts ending on or after 1 January 2011.

This was followed by a formal consultation between 13 July 2010 and 5 October 2010. The Government announced its proposals on the final design of the bank levy in a Consultation Response Document (PDF 409KB) () on 21 October 2010.

Draft legislation, supported by a Technical Note and an Explanatory Note were also published on 21 October 2010 and following further consultation on these draft clauses the draft legislation dealing with the bank levy was published as part of the draft Finance Bill 2011 on 9 December 2010.

Finance Bill 2011 received Royal Assent in July 2011 and the bank levy can be found at Schedule 19, Finance Act 2011.

Bank Levy rescope

At Summer Budget 2015 the Government announced that, in line with the evolving regulatory landscape and as part of wider bank tax changes, the Bank Levy would be re-scoped from 1 January 2021 and would be levied solely on the UK balance sheet equity and liabilities of banking groups. Broadly, this means that overseas activities of UK headquartered banking groups will no longer be subject to the Bank Levy.

This announcement was followed by a formal consultation between 9 December 2015 and 4 March 2016. The Government announced its proposals on the final design of the rescope in a Consultation response document on 5 December 2016.

Draft legislation supported by a Tax Information and Impact Note and an Explanatory Note were published on 13 September 2017. Following further consultation on these draft clauses the draft legislation dealing with the rescope of the Bank Levy was published as part of the Finance Bill 2017-18 on 1 December 2017.

The revised Bank Levy tax rules were enacted in Schedule 9 to the Finance Act 2018 (FA 2018) giving effect to the reduction of the scope of Bank Levy for chargeable periods ending on or after 1 January 2021.