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Bank levy set for ‘revenue-neutral’ reform

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The government is consulting until 8 May 2014 on a ‘revenue-neutral’ reform of the bank levy, allocating banks into different charging bands according to their chargeable balance sheet equity and liabilities. Depending on the responses received, the government intends to introduce legislation into Finance Bill 2014 at report stage, with the changes taking effect for chargeable periods beginning on or after 1 January 2015. A number of working groups will be held during the consultation period. The proposal is to move away from the existing system of headline rates and towards a banding approach. Under this approach, banks would be allocated into different bands, according to their chargeable balance sheet equity and liabilities, with each band corresponding to a pre-set charge paid by all banks within that band. The consultation seeks views not only on the overall concept of banding, but also on the design of the banding and how to address cliff-edge effects.