BANKS were hit with another hike in the government’s bank levy yesterday as the chancellor increased it to 0.105 per cent – the fourth rise since its creation just over a year ago.
George Osborne said the 0.017 per cent increase would make sure that banks do not benefit from his cutting of corporation tax to 24 per cent. It will raise an extra £1.8bn over five years.
But analysts and bankers say lenders would rather pay a higher rate of corporation tax than a higher bank levy because they can offset losses against their UK tax and it only hits profits made here. Banking analyst Ian Gordon of Evolution Securities said: “There’s an element of unfairness – in terms of who it hits hardest, it’s HSBC.”
HSBC chairman Douglas Flint has called the levy “a location tax”, arguing it is worse than other taxes because it hits overseas growth. He said it is the second most important factor in deciding the bank’s domicile.