UK Government publishes draft legislation on the Bank Levy
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Issued 21 October 2010
Financial Secretary to the Treasury, Mark Hoban MP, announced
today the publication by the Government of draft
legislation on the Bank Levy, which was announced in the June
Following consultation with industry over the summer, the
draft legislation and accompanying consultation response sets out the
details of how the levy will work ahead of final legislation, which
will be published before the end of the year.
The Government has carefully considered the responses from
all interested parties during the consultation to help ensure the
successful introduction of the Bank Levy, which is intended to
encourage banks to move to less risky funding profiles. The levy is
expected to generate around £2.5 billion of annual revenues by 2012-13.
The levy will be permanent.
Mark Hoban said:
"We have consulted on the design of the scheme so that it
achieves two objectives: firstly, ensuring that banks make a
fair contribution in respect of the potential risks they pose to the UK
financial system and wider economy. Secondly, the final
scheme design incentivises banks to make greater use of more stable
financial sources, such as long term debt and equity, working
with the grain of our wider reform programme."
1. In its June Budget, the Government announced that
it would introduce a levy based on banks’ balance sheets from 1 January
2011, intended to encourage banks to move to less risky funding
addition to introducing a Bank Levy, the Government is taking action to
tackle unacceptable bank bonuses. The Independent Commission on Banking
will look at structural and non-structural measures to reform the
banking system and promote competition. The Government will also
consult on a remuneration disclosure scheme and, working with
international partners, will explore the costs and benefits of a
Financial Activities Tax on profits and remuneration. The Government
has also asked the Financial Services Authority, as part of its
forthcoming review of its Remuneration Code to consider imposing more
stringent requirements on the deferral and award of variable pay;
examine mechanisms for strengthening the link between performance and
remuneration to ensure that incentives are aligned with the long-term
performance of the firm; and consider how to vary capital requirements
to offset risk in remuneration practices.
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Article Published/Sorted/Amended on Scopulus 2010-10-22 10:40:19 in Tax Articles