The chancellor wants the UK’s leading banks to sign up to a new code of conduct on tax avoidance
Banks are due to find out later how a new Treasury levy on their balance sheets will operate.
It is expected to raise about £2.5bn a year by 2013 – less than one-tenth of 1% of the banks’ relevant liabilities.
Chancellor George Osborne said on Wednesday he wanted “to extract the maximum sustainable tax revenues from financial services”.
The banking industry has warned the move could impact on the UK’s attractiveness as a financial centre.
“We neither want to let banks off making their fair contribution, nor do we want to drive them abroad,” the chancellor said as he unveiled to MPs the results of the Spending Review, which will see £81bn cut from public spending over the next four years.
“Many hundreds of thousands of jobs across the whole United Kingdom depend on Britain being a competitive place for financial services.”
The levy is expected to be introduced in January and differs to the previous government’s tax on bank bonuses.
It will be a tax on the total size of bank balance sheets, but certain items, including retail deposits covered by insurance and bank capital, will be excluded.
According to June’s Budget documents, the levy will be set at 0.04% in the first year and will then rise to 0.07%.
It is not expected to affect smaller banks and building societies, but the UK operations of foreign banks will have to pay.
The British Bankers’ Association said its members “fully understand they have a role to play in the UK’s economic recovery”.
But it said: “We clearly need to see the detail of today’s announcements to be able to assess their impact on the UK banking sector and our attractiveness as a global financial centre.”
It added that it was pleased that the chancellor had indicated the government wanted to strike a balance between raising tax revenues and keeping the UK’s financial services sector competitive.
Mr Osborne has also made it clear that he expects the major banks to sign a new code of practice on tax avoidance.
So far only four of the 15 leading banks operating in the UK have joined up, but the chancellor says he wants all of them to do so by the end of November.
The code calls on banks to ensure that their tax and the tax obligations of their customers are observed – and that they do not go out of their way to avoid tax for themselves or clients.
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