HMRC internal manual

Bank Levy Manual

BKLM310000 - Chargeable equity and liabilities prior to 1 January 2021: background

For chargeable periods ending prior to 1 January 2021

Once it has been established under Part 3 of Schedule 19 that an entity falls within the remit of the bank levy, the equity and liabilities that will be chargeable must be identified.

The bank levy is chargeable on certain equity and liabilities that arise on relevant balance sheets. See BKLM320000 for the calculation methodology for different entities and groups.

Certain equity and liabilities are excluded from the bank levy (see BKLM330000) and there are certain rules relating to:

  • aggregation (see BKLM340000) of certain equity and liabilities
  • netting (see BKLM350000) of certain groups of assets and liabilities, and
  • deduction from chargeable equity and liabilities of certain high quality liquid assets (see BKLM360000).

The bank levy can encompass a range of entities within groups which may have different accounting policies, as well as differing levels of interaction and interdependence depending upon the particular group structure. It is therefore a necessary design feature of the bank levy to have different bases on which to establish the equity and liabilities to be charged to the bank levy. The methods adopted ensure a consistent, level playing field treatment across the different banking structures while minimising as far as possible the compliance burden.

The identification and calculation of the chargeable equity and liabilities depends upon whether the relevant entity or group is a:

  • UK banking group or building society group - see BKLM321000
  • foreign banking group - see BKLM322000
  • relevant non-banking group - see BKLM323000
  • UK resident bank or building society (not member of a group) - see BKLM324000
  • relevant foreign bank (not a member of a group) - see BKLM325000

See BKLM323500 for rules relating to joint ventures.