BKLM154800 - Introduction: Structure: steps for determining the amount of the bank levy: provisions for periods that fall into different rate periods
Paragraph 7 of Schedule 19
The bank levy rates for long term chargeable equity and liabilities and short term chargeable liabilities have changed over time. The period for which each rate applies is the “rate period”.
| Rate Period | Rate for chargeable equity and long term liabilities | Rate for short term chargeable liabilities |
|---|---|---|
| 1 January 2011 - 28 February 2011 | 0.025% | 0.05% |
| 1 March 2011 - 30 April 2011 | 0.05% | 0.1% |
| 1 May 2011 - 31 December 2011 | 0.0375% | 0.075% |
| 1 January 2012 - 31 December 2012 | 0.044% | 0.088% |
| 1 January 2013 to 31 December 2013 | 0.065% | 0.130% |
| 1 January 2014 to 31 March 2015 | 0.078% | 0.156% |
| 1 April 2015 to 31 December 2015 | 0.105% | 0.21% |
| 1 January 2016 to 31 December 2016 | 0.09% | 0.18% |
| 1 January 2017 to 31 December 2017 | 0.085% | 0.17% |
| 1 January 2018 to 31 December 2018 | 0.08% | 0.16% |
| 1 January 2019 to 31 December 2019 | 0.075% | 0.15% |
| 1 January 2020 to 31 December 2020 | 0.07% | 0.14% |
| Any time on or after 1 January 2021 | 0.05% | 0.10% |
Paragraph 7 contains special provisions for chargeable periods that fall into different rate periods. It amends Step 7 of paragraph 6(2) as follows:
- Calculate the proportion of the chargeable period that falls into each rate period (as shown in the first column of the table above) as a percentage: P%
- For each rate period charge P% of the long term chargeable equity and liabilities at the bank levy rate shown in the second column.
- For each rate period charge P% of the short term chargeable equity and liabilities at the bank levy rate shown in the third column.
- Add together the results for each rate period that falls within the chargeable period to give the amount of the bank levy.
The rules relating to chargeable periods starting before 1 January 2011 remain unaltered. Any part of the chargeable period starting before 1 January 2011 is ignored and the bank levy is calculated as if the chargeable period started on 1 January 2011.
Example: 12 month period of account ending 31 October 2016
Bank Z has long term chargeable equity and liabilities and short term chargeable liabilities, calculated to Step 5 of Paragraph 6(2), of £150bn and £375bn respectively. It is a 12 month period so Step 6 is skipped – See BKLM154600.
Rate period 1 April 2015 to 31 December 2015
The long term rate is 0.105% and the short term rate is 0.21% for this rate period.
The proportion (P%) of the chargeable period falling into this rate period is 25% (3 months - 1 October 2015 to 31 December 2015).
P% of the long term equity and liabilities is 25% x £150bn = £37.5bn. The bank levy charge is therefore: 0.105% x £37.5bn = £39.375m
P% of the short term liabilities is 25% x £375bn = £93.75bn. The bank levy charge is therefore: 0.21% x £93.75bn = £196.875m
Rate period 1 January 2016 to 31 December 2016
The long-term rate is 0.09% and the short term rate is 0.18% for this rate period.
The proportion (P%) of the chargeable period falling into this rate period is 75% (9 months - 1 January 2016 to 31 October 2016).
P% of the long term equity and liabilities is 75% x £150bn = £112.5bn. The bank levy charge is therefore: 0.09% x £112.5bn = £101.25m
P% of the short term liabilities is 75% x £375bn = £281.25bn. The bank levy charge is therefore: 0.18% x £281.25bn = £506.25m
The total bank levy chargeable for the chargeable period is therefore:
£39.375m + £196.875m + £101.25m + £506.25m = £843.75m
Example: 15 month period of account ending 31 March 2016
Bank X has long term chargeable equity and liabilities and short term chargeable liabilities, calculated to Step 5 of Paragraph 6(2), of £200bn and £300bn respectively.
As it is a 15 month period, the chargeable equity and liabilities are adjusted to take account of the longer period by Step 6 of Paragraph 6(2) – See BKLM154600.
£250bn of long term liabilities adjusted for the purposes of Step 6.
£375bn of short term liabilities adjusted for the purposes of Step 6.
NB These figures have been rounded for ease of the following calculations.
Rate period 1 January 2014 to 31 March 2015
The long term rate is 0.078% and the short term rate is 0.156% for this rate period.
The proportion (P%) of the chargeable period falling into this rate period is 20% (3 months - 1 January 2015 to 31 March 2015).
P% of the long term equity and liabilities is 20% x £250bn = £50bn. The bank levy charge is therefore: 0.078% x £50bn = £39m
P% of the short term liabilities is 20% x £375bn = £75bn. The bank levy charge is therefore: 0.156% x £75bn = £117m
Rate period 1 April 2015 to 31 December 2015
The long term rate is 0.105% and the short term rate is 0.21% for this rate period.
The proportion (P%) of the chargeable period falling into this rate period is 60% (9 months - 1 April 2015 to 31 December 2015).
P% of the long term equity and liabilities is 60% x £250bn = £150bn. The bank levy charge is therefore: 0.105% x £150bn = £157.5m
P% of the short term liabilities is 60% x £375bn = £225bn. The bank levy charge is therefore: 0.21% x £225bn = £472.5m
Rate period 1 January 2016 to 31 December 2016
The long term rate is 0.09% and the short term rate is 0.18% for this rate period.
The proportion (P%) of the chargeable period falling into this rate period is 20% (3 months - 1 January 2016 to 31 March 2016).
P% of the long term equity and liabilities is 20% x £250bn = £50bn. The bank levy charge is therefore: 0.09% x £50bn = £45m
P% of the short term liabilities is 20% x £375bn = £75bn. The bank levy charge is therefore: 0.18% x £75bn = £135m
The total bank levy chargeable for the chargeable period is therefore:
£39m + £117m + £157.5m + £472.5m + £45m + £135m = £966m
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.