Jun 09 2015

Tax review: George Osborne Mansion Speech to placate UK-based banks over financial crisis regulation

Chancellor George Osborne is set to propose a tax review in an attempt to keep banks such as HSBC and Standard Chartered in the UK during his Mansion Speech on 10 June.

The review will look at the bank levy, imposed during the financial crisis to protect customers of retail banks. The levy applies to big UK banking groups and multinational banks headquartered in the UK. According to the Financial Times, Osborne will mention "banker bashing" in the speech.

Chancellor George Osborne is set to propose a tax review in an attempt to keep banks such as HSBC and Standard Chartered in the UK during his Mansion Speech on 10 June.
The review will look at the bank levy, imposed during the financial crisis to protect customers of retail banks. The levy applies to big UK banking groups and multinational banks headquartered in the UK. According to the Financial Times, Osborne will mention "banker bashing" in the speech.
The proposal of the review is considered an offer of reconciliation after years of regulations imposed on banks, after which Osborne is now set to underline the importance of stability rather than regulation.
HSBC, the third biggest bank in the world, pays 40% of this levy, which costs the bank £750m ($1.15bn, €1.02bn) a year. The bank is expected to discuss an answer to the high costs of tax in its investor update on Tuesday (9 June).
Sir David Walker, former chairman of Barclays bank, called on Osborne to review the taxes imposed on banks in an opinion piece in the Telegraph last week (3 June), saying that it would put the UK in a competitive disadvantage.
"The Treasury has estimated implementation costs to be some £2.5bn with ongoing annual running costs of more than £4bn," Walker wrote. "It is inevitable that a large part of these extra costs will fall, one way or another, on bank customers."
"We also now know that no other country is likely to impose such extra costs on banks or customers. This unique structure risks preventing UK banks from competing on equal terms with their foreign counterparts and may even see some operations moved abroad."
The finance ministry has not yet commented on the expectations, but a spokesman told Reuters that the ministry is keen to keep the UK's position as a global financial hub.
"As set out at the budget, it is right that, as it becomes more profitable, our banking sector makes a fair contribution to fixing the public finances," the spokesman told Reuters.

Archives →