HMRC's published guidance on the UK Bank Levy — rates, chargeable equity and liabilities, the January 2021 UK-only scope change, the Bank Surcharge, and the five-year rate reference from 2022/23 to 2026/27.
All figures sourced from HMRC's published guidance and OBR receipts data. The Bank Levy applies only to qualifying banks and building societies — not to the general public or corporate taxpayers outside the banking sector.
Per HMRC's published Bank Levy Manual (BKLM) on GOV.UK, the Bank Levy is an annual charge on the chargeable equity and liabilities of qualifying UK banks, building societies, and their groups. It was introduced in January 2011 following the financial crisis, as a way to ensure the banking sector makes a fair contribution reflecting the risks it poses to the financial system and wider economy.
HMRC's full technical guidance is in the Bank Levy Manual (BKLM) on GOV.UK. The primary legislation is Schedule 19 to the Finance Act 2011. The current rates are confirmed at BKLM160000.
| Tax year | Short-term rate | Long-term rate | Scope |
|---|---|---|---|
| 2022/23 | 0.10% | 0.05% | UK balance sheet only |
| 2023/24 | 0.10% | 0.05% | UK balance sheet only |
| 2024/25 | 0.10% | 0.05% | UK balance sheet only |
| 2025/26 | 0.10% | 0.05% | UK balance sheet only |
| 2026/27 | 0.10% | 0.05% | UK balance sheet only |
Source: GOV.UK — HMRC Bank Levy Manual BKLM160000. Both rates have been unchanged since 1 January 2021.
Per HMRC's published guidance, the Bank Levy applies to two categories of balance sheet items at different rates:
| Category | Rate | Definition |
|---|---|---|
| Short-term chargeable liabilities | 0.10% | Liabilities with a maturity of one year or less — higher rate reflects greater systemic risk |
| Long-term chargeable equity and liabilities | 0.05% | Equity and liabilities with a maturity of more than one year — lower rate for more stable funding |
| Certain excluded liabilities | Nil | Tier 1 capital, insured retail deposits, and certain other items are excluded from the chargeable base per HMRC's guidance |
Per HMRC's published guidance, the Bank Levy only applies to banks, building societies and banking groups with chargeable equity and liabilities of £20 billion or more. Institutions below this threshold do not pay the levy. This threshold has been in place since the levy's introduction in 2011. The vast majority of UK financial institutions are below this threshold and are therefore outside the scope of the levy.
A significant structural change to the Bank Levy took effect from 1 January 2021. Per HMRC's published guidance, from that date the levy applies only to the UK balance sheet equity and liabilities of banks and building societies. The overseas activities and foreign subsidiaries of UK-headquartered banking groups are no longer within the scope of the levy.
Before 1 January 2021: UK banking groups were charged on their worldwide balance sheets — the levy applied to the consolidated global equity and liabilities of UK-headquartered groups.
From 1 January 2021 onwards: All qualifying institutions are charged only on UK balance sheet equity and liabilities. This change removed a competitive distortion that had previously disadvantaged UK-headquartered banks relative to foreign banking groups (which had always only been charged on their UK presence). The change was legislated in Finance Act 2017.
| Entity type | Chargeable on |
|---|---|
| UK banking group (UK-headquartered) | UK balance sheet equity & liabilities (from Jan 2021) |
| UK building society group | UK balance sheet equity & liabilities (from Jan 2021) |
| Foreign banking group — UK subsidiary | UK presence equity & liabilities |
| Foreign banking group — UK branch | UK-allocated equity & liabilities |
| Relevant non-banking group with UK bank members | UK banking sub-group equity & liabilities |
Source: GOV.UK — HMRC BKLM321000 (UK banking groups) and BKLM322050 (foreign banking groups).
Per HMRC's published guidance, the Bank Surcharge is a separate additional charge — distinct from the Bank Levy — on the corporation tax profits of banks above an annual allowance of £100 million. The surcharge is charged in addition to the standard corporation tax rate, giving a combined headline rate for banking profits above the allowance.
| Period | Surcharge rate | Annual allowance | Combined with corp tax |
|---|---|---|---|
| 2022/23 (to 31 Mar 2023) | 8% | £25m | 19% + 8% = 27% |
| From 1 Apr 2023 | 3% | £100m | 25% + 3% = 28% |
| 2024/25 | 3% | £100m | 25% + 3% = 28% |
| 2025/26 | 3% | £100m | 25% + 3% = 28% |
| 2026/27 | 3% | £100m | 25% + 3% = 28% |
Source: GOV.UK — Bank Surcharge guidance. The Bank Surcharge and Bank Levy are separate taxes with separate bases — the surcharge is profit-based; the levy is balance-sheet-based.
Per the Office for Budget Responsibility's published forecasts, the Bank Levy is estimated to raise approximately £1.4 billion in 2025/26. Bank Surcharge receipts were £1.0 billion in financial year 2024/25, per HMRC's published statistics. These are aggregate industry figures — individual institution liabilities depend on their specific balance sheet positions.
Per HMRC's published guidance and OBR records, the Bank Levy rate changed significantly over its history before stabilising at current levels from January 2021. Understanding this history is relevant for institutions reviewing historical liabilities, historical returns, or decommissioning positions across earlier periods.
| Period | Short-term rate | Long-term rate | Scope |
|---|---|---|---|
| 2011 (introduction) | 0.05% | 0.025% | Worldwide (UK groups) |
| 2012–2015 (various increases) | Up to 0.21% | Up to 0.105% | Worldwide (UK groups) |
| 2016–2020 (progressive cuts) | 0.21% → 0.10% | 0.105% → 0.05% | Worldwide → UK-only transition |
| From 1 January 2021 | 0.10% | 0.05% | UK balance sheet only |
| 2022/23–2026/27 | 0.10% | 0.05% | UK balance sheet only |
Source: HMRC BKLM160000 & OBR: Bank Levy receipts and forecasts. Historical rates shown for reference — the rates from January 2021 apply to all periods within this guide's 2022/23–2026/27 scope.
This page is an informational summary of HMRC's published guidance — not personalised tax guidance. Bank Levy involves complex balance sheet identification and netting rules. Our free matching service connects you with verified UK tax professionals experienced in banking sector taxation.
Answers based on HMRC's published guidance with direct GOV.UK links. Informational guide only — not personalised tax guidance.
This page is an informational summary of HMRC's published rules — not personalised tax guidance. Our free matching service connects you with verified UK tax professionals specialising in banking sector taxation.
Important — informational guide only, not tax or legal guidance. UK Tax Hero summarises HMRC's published guidance as a free information and expert-matching service. Nothing on this page constitutes personalised tax guidance, legal guidance or a recommendation to take any action. Figures shown are based on HMRC's published guidance for 2022/23 to 2026/27. Always verify on GOV.UK and consult a qualified professional before acting. UK Tax Hero is not regulated by HMRC, the FCA or any professional body.
