8th Jul 2015 13:46
LONDON (Alliance News) - The UK bank levy will be gradually reduced over the next six years and then no longer applied to worldwide balance sheets, UK Chancellor George Osborne said on Wednesday, though an 8% tax charge is to be introduced on bank profits.
Delivering his first Budget speech since the Conservative Party secured a majority in May's General Election, Osborne said tax on banks needs to be "stable, sustainable and fair".
Matthew Barling, a banking tax partner at audit firm PricewaterhouseCoopers, said the changes would be welcomed by banks with large overseas operations, although he thinks the overall message for the industry is mixed.
"However, the long-term phased nature of the reform coupled with the new profits-based 8% corporation tax surcharge means that the overall tax burden on the banking sector will go up during this parliament. This sends very much a mixed message in terms of competitiveness of the UK as a place for carrying on banking business," Barling said.
Shares in HSBC Holdings PLC, which is reviewing whether to move its global headquarters from London, partly due to the costs of the bank levy, had risen as high as 567.50 pence immediately following Osborne's announcement. They later reversed and were down 0.3% at 557.13p at mid-afternoon.
Shares in Standard Chartered PLC, a UK-based bank with predominantly overseas operations, were down 2.9% at 969.50. The shares had started Wednesday lower amid the continued equity market rout in China. They spiked briefly upon the bank levy announcement but also have come off since.
By Samuel Agini; [email protected]; @samuelagini
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