The Chancellor announced today that the Government will introduce a bank levy with effect from 1 January 2011. Rather than the 10 per cent proposed by the Liberal Democrats in their manifesto, the levy generally will be set at 0.07 per cent.
The levy will be calculated by reference to:
• the consolidated balance sheet of UK banking groups and building societies;
• the aggregated subsidiary and branch balance sheets of foreign banks and banking groups operating in the UK; and
• the balance sheets of UK banks in non-banking groups.
Institutions will be liable for the levy only where their relevant aggregate short and long term liabilities (excluding Tier 1 capital, insured retail deposits, repos secured on sovereign debt, and policyholder liabilities of retail insurance businesses within banking groups) amount to £20 billion or more.
The Government will consult over the summer. Final details of the levy will be published later this year, following this consultation. Anti-avoidance provisions will be introduced.