The benefit of lower corporation tax is tempered for banks by the new bank levy. As trailed in the Coalition Agreement the bank levy will be imposed from 1 January 2011 raising £2 billion a year.
The stated aims are to encourage banks to move to less risky longer-term funding and to ensure a ‘fair contribution’ to the UK financial system reflecting the risks they pose. The levy is not an insurance fund and proceeds will not be ring-fenced – so can be spent.
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