Q.WHAT LEVEL IS THE LEVY BEING SET AT?
A.The government gave no details on the rate at which the levy will be set. When it first unveiled plans in June, it said the initial rate would be 0.04 per cent rising to 0.07 per cent in 2012-13. However, many analysts think that rate is too high if the exchequer wants to cap the amount of revenue raised at £2.5bn.?The first £20bn of assets is tax-free.
Q.WHAT CONCESSIONS DID THE BANKS EXTRACT?
A.Unprotected customer deposits will be levied at half the rate of other “risky assets” like wholesale funding. Asia-focused banks like HSBC and Standard Chartered, argued that they would be disproportionately affected, because Asian depositors are not normally protected by the government.
Q.WOULD BANKS PAY LESS BY MOVING OFFSHORE?
A.Some banks would, yes. Foreign banks only have to pay the levy on their UK operations. So if HSBC were to move to Hong Kong, it wouldn’t have to pay the levy on any foreign assets at all?– just British ones – saving it a considerable amount. However, some foreign banks could be levied twice, if their home countries adopt a similar tax. The Treasury says it will give relief to banks being taxed twice but it hasn’t come forward with details on how it expects to do this.