Tax on high street banks to rise: Lenders face 24% rise in levy
Chancellor said this would ensure banks don't benefit from further cuts in corporation tax in 2014
23:39 GMT, 5 December 2012
High Street lenders face a 24 per cent increase in the bank levy as the Government strives to hit its target of raising more than 2billion a year.
The tax – which was introduced in the wake of the financial crisis – will increase to 0.13 per cent of their balance sheets next month, up from 0.105 per cent.
The Chancellor said this would ensure banks don’t benefit from further cuts in corporation tax in 2014.
Rise: High street lenders such as Lloyds will face a 24 per cent increase in the bank levy
It comes as the Treasury faces a 400million shortfall this year from the tax.
A Treasury watchdog yesterday predicted the bank levy will raise just 1.8billion this year.
This compares with the 2.2billion predicted by the independent Office for Budget Responsibility in the March budget.
Critics slammed the amount raised as ‘minuscule’ compared with the damage banks have caused to taxpayers and the economy.
Lenders, including state-backed Royal Bank of Scotland and Lloyds, have shrunk dramatically since the financial crisis.
This means their tax bill has been cut – as the bank levy is based on the size of their balance sheet.
The Treasury, pictured as Osborne leaves, faces a 400million shortfall this year from the tax
The Chancellor said the increase in the bank levy means lenders will not benefit from the cut in corporation tax from 22 per cent to 21 per cent in April 2014.
But Deborah Hargreaves, from the High Pay Centre, said: ‘These amounts are minuscule compared with the costs that the banks have inflicted on our children and grandchildren.
‘The government should have the courage to hit bankers where it hurts and introduce a special tax on their bonuses.’