Banks to face £2.5bn tax as part of UK expenditure review

21 October 2010

Banks located in the UK will face a £2.5 billion levy as part of the British government’s spending review.

George Osborne, shadow chancellor of the exchequer, revealed the tax as part of a number of plans for the government to make cuts to its spending program.

In the review, the government explained that it hoped the tax would mean the banking industry makes “a full and fair contribution” while ensuring the UK retains its reputation as a “competitive global centre”.

Mr Osborne, who was quoted by Bloomberg, said: “The permanent levy will raise more net each year and every year for the Exchequer than the one-year bonus tax did.

“We neither want to let banks off making their fair contribution, nor do we want to drive them abroad.”

The coalition government “expects the banking sector to comply with both the letter and the spirit of the law and not to engage in or promote tax avoidance”, the report explained.

Meanwhile, recent media reports revealed that only four out of the 15 major financial institutions in the UK had signed up to a new tax code implemented by the previous government.

By Jim Ottewill

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