Belfast Telegraph

Banks vent fury over extra £40bn in taxes from Osborne's levies

By Roger Baird

Britain's banks will pay nearly £40bn in extra taxes after being hit by levies under Chancellor George Osborne, according to industry research.

The figures by banking lobby group the British Bankers' Association (BBA) show that the sector will pay out £39.4bn in levies between 2010/11 and 2020/21 - in addition to other company charges such as business rates and corporation tax.

The BBA is calling on the Government to review UK bank taxes to ensure the industry remains competitive.

The survey comes after the Chancellor moved to cut the current bank levy over the next six years, while hitting the sector with a new 8% surcharge on profits.

The surcharge will take effect from January 1 next year and will see banks pay an extra £2bn in taxes over the next five years.

The Government added that from January 2021, the bank levy will only be charged on the UK balance sheets of lenders based in the UK, not on their worldwide operations.

But the move angered the BBA, which said this was the fifth new tax on banks the Chancellor had introduced in as many years.

BBA chief executive Anthony Browne said: "Banks expect to pay their fair share of tax. But they are concerned that they are being singled out for new punitive taxes every year. This makes it harder for banks - the UK's biggest export industry - to lend to businesses and create new jobs."

The BBA said over the last five years the Chancellor had introduced the bank levy, a bonus tax and changes to restrict the amount of bank profits that can be offset by carried-forward losses.

The summer Budget also approved rules to restrict bank customer compensation expenses against corporation tax, plus new 8% bank surcharge on profits.

The BBA said the bank levy was paid by 30 banks, but the new surcharge will be levied on hundreds of banks and building societies.

It pointed out that over the 10-year period the bank levy will bear the heaviest burden on the industry, accounting for £25bn of extra tax.

UK banks have been under the spotlight since the financial crisis in 2008, when the Government bailed out RBS and Lloyds Banking Group, at a cost of £45bn and £20bn respectively. It still holds a 78% stake in RBS, and just under a 16% holding in Lloyds.

Belfast Telegraph