Draft regulations: amendment to the Bank Levy rules on deductions for certain loss absorbing instruments
Detail of outcome
Responses to this consultation contributed to the amendment to the Bank Levy rules on deductions for certain loss absorbing instruments. You can also read a tax information and impact note.
Original consultation
Consultation description
The Finance Act 2018 (FA 18) introduced new rules so that the Bank Levy will only be chargeable on UK balance sheet equity and liabilities from 1 January 2021.
Regulatory requirements mean that UK balance sheets include funding raised externally by UK entities to fund overseas subsidiaries. In line with the aims of the rescope, no levy should be charged on such UK equity and liabilities.
The new rules therefore include a deduction from a UK entity’s equity and liabilities where it holds assets representing loss absorbing instruments issued by overseas subsidiaries to meet regulatory requirements.
The Bank of England’s regulatory requirements on which this deduction relied had not been published at the time of FA 18’s enactment, so regulation-making powers were included in FA 18 to provide detailed conditions for the deduction. The requirements have now been published and the government has therefore drafted regulations to clarify the scope of the rules that take effect on 1 January 2021.
Before submitting your response, you can read:
- (draft) The Bank Levy (Loss Absorbing Instruments) Regulations 2020
- (draft) explanatory memorandum
- (draft) tax information and impact note
- (draft) guidance on loss absorbing instruments issued by overseas subsidiaries
Please note that because our offices are closed due to coronavirus (COVID-19) we are unable to accept postal responses.
Documents
Last updated 30 October 2020 + show all updates
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Added consultation outcome, including link to the relevant statutory instrument and tax information and impact note.
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First published.