U.K. Bank Levy Raised to Prevent Windfall on Corporation Tax

U.K. Chancellor of the Exchequer George Osborne said the levy on banks will be increased for a sixth time to ensure lenders don’t benefit from a cut in corporation tax.

The tax on balance sheets will rise to 0.142 percent from next year, Osborne told Parliament today in London. It increased to 0.13 percent this year.

“As with previous reductions in the corporate tax rate, I do not intend to pass the benefit onto to the banking sector,” Osborne said.

The levy is designed to raise at least 2.5 billion pounds ($3.8 billion) a year, while ensuring banks contribute to reflect the risks they pose to the financial system and economy, according to the Treasury. Osborne cut corporation tax by 1 percentage point to 20 percent from April 2015, he said.

Gross domestic product will increase 0.6 percent this year, compared with a previous forecast of 1.2 percent, Osborne said as he delivered his annual budget statement today, citing the Office for Budget Responsibility’s predictions.

-- Editor: Jon Menon

To contact the reporter on this story: Howard Mustoe in London at hmustoe@bloomberg.net.

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

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