Explanatory Notes

Finance Act 2013

2013 CHAPTER 29

17 July 2013

Introduction

Section 205 Bank Levy Definition of High Quality Liquid Assets

Summary

1.Section 205 amends the bank levy definition of high quality liquid assets (HQLA) to put beyond doubt that HQLA for bank levy purposes are identical in concept to the regulatory definition of assets qualifying for the Prudential Regulation Authority's liquid assets buffer. The section has effect from 1 January 2011.

Details of the Section

2.Subsection (1) amends Paragraph 70, Schedule 19, Finance Act 2011 to confirm that the bank levy definition of HQLA mirrors the regulatory definition of assets that are eligible for inclusion in a firm’s regulatory liquid assets buffer.

3.Subsection (2) provides that the changes made by subsection (1) are to be treated as always having had effect in relation to chargeable periods ending on or after 1 January 2011.

Background

4.The bank levy is an annual balance sheet charge based upon the chargeable equity and liabilities of all UK banks and building society groups, foreign banks and banking groups operating in the UK and UK banks in non-banking groups from 1 January 2011 onwards.

5.Bank levy is treated as if it is corporation tax, and the relevant entity or, in the case of a banking group, the “the responsible member” (see paragraph 54, Schedule 19) is required to both make a return of the bank levy (as part of its company tax return) and to pay the bank levy.

6.In determining chargeable equity and liabilities a deduction is permitted for any high quality liquid assets that are included within, or could be included within a firm’s regulatory liquid assets buffer.