Bank bashing levy hike stops lenders gaining from rate relief

Tim Wallace
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BANKS will not benefit from the fall in corporation tax because George Osborne yesterday hiked the bank levy for the six consecutive year.

Lenders will pay 0.142 per cent of equity and liabilities from January 2014, from 0.13 per cent now.

The levy “reflects the risks banks pose to the financial system and the wider economy,” Osborne said.

The increase means the Treasury takes £2.7bn from the industry in 2013-14 and £2.9bn in each year after that. The levy has risen each year because banks are shrinking their balance sheets, reducing the amount it brings in.

It raised £1.6bn in 2012-13, the Office for Budget Responsibility revealed yesterday, well below the £2.5bn target and down on the previous year’s £1.8bn despite the increase in rate.