BKLM154600 - Introduction: structure: steps for determining the amount of the bank levy: step 6

Paragraph 6(2) of Schedule 19

If the chargeable period for the bank levy is a 12 month period of account, Step 6 is ignored, and the calculation moves directly on to Step 7 – see BKLM154700.

There will be occasions where the chargeable period for the bank levy is not a 12 month period of account. In these cases an adjustment to the amount of chargeable equity and liabilities is needed to reflect the length of period that the chargeable period covers.

The adjustment is undertaken once the steps 1- 5 in paragraph 6(2) have been carried out.

So, once the correct proportions of long term and short term chargeable equity and liabilities that remain after Step 5 have been identified for each type:

  1. Divide each figure by 365, and
  2. Multiply those numbers by the number of days in the chargeable period.

Example: 15 month period of account to 31 March 2015

Equity and liabilities chargeable to the levy from 15-month period to 31 March 2015 balance sheet for bank X are £500bn split as follows: £200bn of long term liabilities and £300bn short term liabilities.

There are 455 days in the chargeable period. Therefore:

£200bn of long term liabilities x 455 / 365 = £249.32bn for the purposes of Step 6.

£300bn of short term liabilities x 455 / 365 = £373.97bn for the purposes of Step 6

These figures are then charged at the relevant levy rate for the period in Step 7 – see BKLM154700. When the chargeable period straddles periods with different levy rates, then Step 7 is modified by paragraph 7 of Schedule 19 – See BKLM154800.

For this example the relevant levy rates are 0.156% and 0.078% for short term and long term liabilities respectively. Therefore the bank levy charge is:

£249.32bn x 0.078% = £194.47m

£373.97bn x 0.156% = £583.40m

The total bank levy payable therefore amounts to £777.87m.

As the chargeable period is greater than 12 months the bank levy will be apportioned between and returned in more than one accounting period of the responsible entity - see BKLM431000.