Chargeable equity and liabilities: relevant entities and groups: UK resident banks and building societies which are not members of groups
Paragraph 21(1) of Schedule 19
If the relevant entity is a UK bank or building society (see BKLM243000 and BKLM244000 respectively) then the bank levy is based upon the entity’s chargeable equity and liabilities. Accordingly, the starting point for the bank levy will be the equity and liabilities that are disclosed in the entity’s financial statements (prepared under IAS or UK GAAP) for the chargeable period.
Paragraph 21(2) of Schedule 19
The following steps should then be followed to determine the amount of chargeable equity and liabilities from the equity and liabilities arising in the entity’s financial statements:
- ignore excluded equity and liabilities (see BKLM330000) within the total equity and liabilities taken from the financial statements
- adjust the remaining equity and liabilities to take into account any equity and liabilities that may be netted under the netting arrangements (see BKLM350000)
- remove from equity and liabilities any amounts that relate to joint ventures that would otherwise be double counted (see BKLM323500), and
- reduce the remaining equity and liabilities (but not below nil) by the amount of the entity’s relevant high quality liquid assets (see BKLM360000). High quality liquid assets should be set against equity and long term liabilities before short term liabilities.
Paragraph 21(3) of Schedule 19
It is possible that some high quality liquid assets may be:
- taken into account in netting, or
- taken into account through any reduction in liabilities due to the removal of double counted joint venture liabilities.
To avoid double relief, the deduction for high quality liquid assets should be restricted by any amounts which have already been excluded through adjustments for netting.
Note: High quality liquid assets should be set off against equity and long term liabilities before short term liabilities.