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HMRC internal manual

Bank Levy Manual

HM Revenue & Customs
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Relevant entities and groups: banking groups: conditions to be met to be a banking group: the exempt activities condition: calculating net income

Calculating the group’s net income for the chargeable period arising from its net basis activities

To calculate the group’s net trading income for a chargeable period, take the financial statements of the group which include the group’s accounts for the relevant period of account and identify the total net income:

  1. arising from ‘net basis activities’ of the group, and
  2. that is accounted for as net income.

A series of adjustments may be needed in respect of, for example:

  • net income for joiners and leavers
  • net-basis accounting
  • income accounted for on a gross basis rather than a net basis.

Insurance accounting

Insurance companies account for some insurance contracts as investment contracts, with the result that premiums are posted to the balance sheet rather than the income statement. In quantifying the trading income of the group for the bank levy such premiums should be treated as trading income.