Bank of England to probe new bank tax

The Bank of England are set to scrutinise George Osborne’s new bank tax rates, after MP’s have urged them to consider the implications for competition in the sector.

Bailey, who runs the Bank of England’s regulation arm, which is the Prudential Regulation Authority, is also being asked to consider capital rules which have also prompted protests from smaller banks [1].

In July, the Chancellor introduced an extra 8% of corporation tax, for banks making profits of over £25m in the next year.

The 8% corporation tax surcharge is being introduced alongside changes to the bank levy, which is being changed under the new system. The changes are said to benefit large international banks such as HSBC and Standard Chartered as they paid the levy on the whole of the balance sheet while challenger banks were not big enough to be captured by the levy [1].

The change in the levy came after complaints from HSBC.

Conservative MP Andrew Tyrie, has already urged the Competition and Markets Authority to consider the implications of the tax as part of its investigation.

Tyrie MP said: “Millions of consumers and small businesses have been getting a poor deal for decades because of inadequate competition and choice in banking. It is crucial that competition from new and smaller banks is not unnecessarily impeded by prudential regulation” [1].

[1]. The Guardian. ‘Bank of England to probe George Osborne’s new bank tax’.