Accountancy giant EY added its voice to the chorus of those speaking out against the government's new bank surcharge, warning that under the new rules the tax take from the banking sector could be double what the Treasury has forecast - and retail banks could be the ones hit hardest.
Under plans for the surcharge, announced at this year's July Budget, while the current levy will be "slowly and gradually" reduced over the next four years, the eight per cent surcharge will be introduced on all profits from the beginning of January 2016. With that in mind, banks will be hit hardest in 2016 and 2017.
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EY said it built models of an archetypal balance sheet and profit forecast for a challenger bank, a large UK-focused domestic bank, and a non-UK headquartered bank.
While the good news was that the total tax take from the UK's burgeoning challenger banking sector is likely to be "proportionally very small", just under £6bn will be raised from "just 10 of the other banks".
"Given this, the tax take from the entire sector could be far more than double the [Treasury] forecast."