BKM404300 - Banking surcharge: surcharge allowance: banking company in a group with more than one banking company

CTA10/S269DE

Where a banking company is a member of a group containing two or more banking companies throughout its chargeable accounting period, its available allowance is:

  • any amounts of group surcharge allowance allocated to it under the mechanism described in BKM404500

Example 1

  • Company A has an accounting period 1 April 2016 to 31 March 2017
  • Company A is the only banking company in Group X
  • Company A leaves Group X on 31 October 2016 and joins Group Y on the same day.
  • Company A is one of 2 banking companies in Group Y
  • Company A is still a member of Group Y at 31 December 2017.
  • Groups X and Y both make their accounts up to 31 December.

For the purposes of the banking surcharge Company A is a member of Group Y for the whole of its accounting period ended on 31 March 2017 as it is included in the consolidated financial statements of Group Y at 31 December 2016 and 31 December 2017 (BKM402900). As Company A is one of two banking companies in Group Y it is entitled to the amount of the group surcharge allowance allocated to it by the nominated member (BKM404500)

Where a banking company is a member of a group containing two or more banking companies for only part of its chargeable accounting period, its available allowance is:

  • any amounts of group surcharge allowance allocated to it under the mechanism described in BKM404500, plus
  • the allowance for the period when it was not a member of a group that had another banking company

The latter amount is calculated as a time apportionment of the £25m maximum for the number of days the company was not a member of a group that had another banking company over the total number of days in the chargeable accounting period. For chargeable accounting periods of less than 12 months the amounts are proportionally reduced.

Example 2

  • Company A has an accounting period 1 April 2016 to 31 March 2017
  • Company A is a member of Group X which makes up its accounts to 30 September.
  • Company A is the only banking company in Group X at 30 September 2016
  • Company B has an accounting period 1 October 2016 to 30 September 2017
  • Both Company A and Company B are banking companies in Group X at 30 September 2017

Company A’s surcharge allowance for its accounting period ended 31 March 2017 is made up of the following:

  • the amount of the group surcharge allowance allocated to it by the nominated member for the period 1 October 2016 to 31 March 2017 (BKM404500) - this is the period when Company B is also a banking company, and
  • £25m x 183/365 - being the maximum £25m allowance multiplied by the number of days in the period when Company A is not a member of a group that has another banking company divided by the total number of days in its chargeable accounting period

A payment which one banking company makes to another banking company up to the amount of the allowance that the first banking company uses is ignored. It is not taken into account in computing the profits or losses of either company, and is not treated as a charge on income or a distribution. The payment must be made under an agreement between the two companies. The maximum payment that can be treated in this way is the amount of the allowance, not the amount of relief in terms of tax.

For example, Company A and Company B are banking companies in Group C. Company A claims £25m of the bank surcharge allowance and pays Company B £15m in respect of the allowance. The payment is not taken into account in calculating the profits or losses of Company A or B.