Richard Milnes, UK Banking Tax Partner at EY, comments on the bank surcharge announcement:
“The bank surcharge rate reduction announced for 2023 will come into effect at the same time as the general corporation tax increase. This has clearly been carefully calibrated, recognising the UK’s need to remain competitive post-Brexit, whilst still enabling the Chancellor to deliver a marginal bank tax rate increase (from 27% to 28%).
“When the bank surcharge was introduced in 2016, the Treasury estimated around 100 banks to be in scope. Today’s increase in the allowance (from £25m to £100m of profits) will dramatically reduce this to fewer than 40 institutions. Those falling out of scope will include domestic challengers, but also a number of foreign banks operating in the UK.
“The banks subject to the surcharge will largely be the same group that also bear the separate bank levy charged on their balance sheets. No change was announced to the levy, meaning the overall UK tax burden on the biggest banks operating in the UK remains high compared to other UK corporates and to other key global financial centres.”