Budget 2013: Levy rise makes it harder for banks to increase lending
21 March 2013
Deloitte, the business advisory firm, says the Chancellor’s decision to increase the Bank Levy to 0.142% will make it harder for banks to lend to small business and consumers.
Wayne Weaver, UK banking tax leader at Deloitte, said:
“The Chancellor’s decision to increase the Bank Levy to 0.142% from January 2014, represents a 61% increase since December 2012 and is almost double the rate that was initially proposed. This is the sixth time that the levy rate has been raised.
The rate increase is not unexpected as the revenue raised from the levy continues to fall short of expectations. The OBR forecast for the current year is only £1.6bn compared with a target of £2.5bn. As banks continue to shrink their balance sheets and improve their funding profile, their bank levy cost reduces, and this mitigates the effect of the higher rate.
“Banks are working hard to increase their capital reserves and the levy increase will make this work harder. The end result is that banks will be less able to increase lending. The Chancellor indicated that the additional costs will be offset by falls in corporation tax but many banks do not currently pay this because they are not making profits.”
Notes to editors
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities.
Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
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