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Bank levy rates to rise early

Bank levy rates to rise early

Category: Banking

Updated: 08/02/2011
First Published: 08/02/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Chancellor has revealed the rate of the bank levy to be charged in 2011 is to be increased earlier than previously anticipated.

With the banks all set to reveal their employee bonus payments, George Osborne has decided to bring forward the tax in a move which will raise the revenue the levy raises this year by £800 million.

The Government initially announced that a reduced rate of 0.05% would apply in 2011, in recognition of the uncertain market conditions which prevailed at the time.

However, it now says it no longer considers this necessary.

As a result, from 1 March the rate of the levy will be 0.1% for two months, to offset the lower rate of 0.05% charged in January and February, before moving to 0.075%.

Explaining the reasons behind the move, the coalition said the Bank of England had recently noted that the near-term outlook and resilience of the UK banking sector has improved.

It added that the markets also now had more certainty as the timing and direction of certain regulatory changes had been confirmed.

The increase in the levy means that it will raise £2.5 billion in 2011, the same as the target revenue for future years.

More than £10 billion is expected to be taken from the banks through the tax over the next four years.

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