View more on these topics

Bank tax ‘will raise twice Govt estimate at £12bn’

The Chancellor’s new bank tax on profits will raise almost twice the amount estimated by the Government at £12bn, according to EY.

Chancellor George Osborne announced in the summer Budget that the bank levy will be gradually reduced over the next six years, with a new tax applicable from 1 January 2016.

The current levy on bank balance sheets will be replaced with an 8 per cent surcharge on profits, which the Treasury forecast will raise £6bn over the current parliament.

However, a report by EY says the figure is “vastly understated”, according to the Times.

EY partner Richard Milnes says: “We are confident it could well be double that, and when you take into account the whole market … It could be even higher.”

Milnes says the Treasury had based its estimate on bank profitability over the past five years, stretching back to the financial crisis when many banks were undergoing intensive restructuring.

He says the EY estimates are based on current market conditions, and have been produced following repeated queries from banking clients questioning the Treasury’s assumptions.

Milnes says: “There’s been an acceptance by the banking sector that the political reality post-financial crisis was going to bring a more punitive tax regime. However, the last 12 months has been a sustained assault on banks’ tax positions.”

A spokesman for the British Bankers’ Association says: “We welcomed the Chancellor’s decision to amend the bank levy to reduce the damage it does to Britain’s biggest export industry.

“However, introducing yet another new bank-specific tax will reinforce fears that Britain is becoming a less attractive place for banks to do business.”

Recommended

John-Cupis-700.jpg
1

Sesame shakes up leadership as mortgage boss John Cupis exits

Sesame Bankhall has announced the departure of its mortgages and wealth management bosses following a restructure of the networks board. Sesame revealed today that wealth management managing director Pan Andreas departed the business in July, while mortgages managing director John Cupis will also exit, although a date has yet to be finalised. Marketing director Jon […]

FCA logo new 3 620x430
22

Brokers and IFAs clash over proc fees

The FCA’s refusal to ban commission in the mortgage market is “inconsistent”, according to life and pensions advisers. The regulator confirmed this week that it had found little evidence of bias, and therefore ruled out a commission ban as part of its upcoming mortgage market reviews. However, advisers already subject to a ban as part […]

David Carrington PTFS

PTFS will hike fees to meet FCA and PI costs

Personal Touch Financial Services is to raise its fees from October in response to rising FCA and professional indemnity costs. The network wrote to members last week to explain that costs would increase before the year-end, with firms paying an extra £4 for FCA bills. Brokers will pay a further £36 per adviser and IFAs […]

Newsletter

News and expert analysis straight to your inbox

Sign up