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HMRC internal manual

Bank Levy Manual

Introduction: structure: steps for determining the amount of the bank levy: step 3

Paragraph 6(2) of Schedule 19

The bank levy has a policy objective of encouraging banks to move to less risky funding profiles. To achieve this objective, a different rate of bank levy is applied to equity and long term liabilities than to short term liabilities.

The Schedule sets out at paragraphs 74 to 77 the following in determining whether equity and liabilities are long term or short term:

All equity is long-term.

Liabilities are long term if:

  • at the last day of the chargeable period they cannot be required to be repaid within a 12 month period from that date
  • in the case of liabilities that are intra-group liabilities where the condition in the first bullet above and certain further conditions are met, or
  • the liabilities are non-protected deposits other than from financial institutions and financial traders.

Once this identification has been undertaken then proceed to Step 4 (BKLM154400).