Banks have been affected by changes announced in today’s Budget.
Companies are currently entitled to deduct the costs of compensation payments in calculating their profits liable to corporation tax. The government has now stated it believes it is unacceptable that banks’ corporation tax receipts continue to be depressed by compensation associated with widespread misconduct in the sector.
The government intends to make these compensation payments non-deductible for corporation tax purposes through legislation in a future Finance Bill.
Meanwhile, the government is to increase the Bank Levy from 0.156% to 0.210% from 1 April 2015.