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HMRC internal manual

Bank Levy Manual

Introduction: structure: steps for determining the amount of the bank levy: step 1

Paragraph 6(2) of Schedule 19

To identify what equity and liabilities of the group or entity should be treated as chargeable equity and liabilities the following should be considered.

For a UK banking group the bank levy is based upon the worldwide group’s chargeable equity and liabilities. Accordingly the starting point for the bank levy will be the equity and liabilities that are reported in the group’s consolidated financial statements (prepared under IAS or UK GAAP) for the chargeable period.

If the group’s consolidated financial statements are not prepared under IAS or UK GAAP, or if no consolidated accounts are prepared at all for the group for a chargeable period, then the equity and liabilities are those that would have been reported had accounts been prepared for the chargeable period under IAS.

When aggregating equity and liabilities (see BKLM340000) of a foreign banking group or relevant non-banking group any equity that would be removed under normal accounting consolidation rules and any liabilities between group members which are within the charge to the bank levy should be ignored.

When calculating the chargeable equity and liabilities certain equity and liabilities can be excluded - see BKLM330000 for further information concerning excluded equity and liabilities.

Under specified circumstances certain liabilities (for example, derivative liabilities) can be reduced (but not to below zero) by netting off certain asset balances that are recognised on the relevant balance sheet. See BKLM350000 for further details.

Chargeable equity and liabilities may also be reduced (but not below zero) by deducting certain specified high quality liquid assets. See BKLM360000 for further details.

Proceed to Step 2 (BKLM154200).