Finance Rebecca Smith · 23 July 2015
Challenger banks including TSB and Secure Trust warn that new tax will hit smallest lenders hardest
The new tax on banks introduced in George Osborne’s latest Budget has seen several challenger banks rally against the change claiming it will have a severe effect on competition. The chancellor introduced the surcharge to partly replace the bank levy a tax on the global balance sheets of the biggest banks which has not been well-received by the big players in the industry. It also saw HSBC confirm its plans to reassess its presence in the UK having moved headquarters from Hong Kong to London in 1993. Osborne’s latest move has been met with unhappiness from challenger banks, as the new charge also affects smaller lenders. Chief executives of TSB and the Yorkshire Building Society have called on the chancellor to amend this so eachwould be excluded. TSB’s CEO Paul Pester said the eight per cent tax, which banks will face as well as other taxes including corporation tax, would make it more difficult to compete with the big banks. we’re supporters of the new tax and the approach the government is taking it is appropriate that banks need to continue to support society, Pester began. But the tax kicks in at 25m of profits and we’ve made our views clear to the Treasury, that we would love to see that level raised a bit. He added that this would take a big chunk off our profits? and consequently would make it more difficult for us to invest to grow and to bring more competition to the UK market. The rise of challenger banks has seen them providing more tailored offerings and looking to fill in the gaps left by the bigger options including focusing on smaller businesses. The government had been a supporter of encouraging competition within the sector, adjusting regulations in order to make it easier to establish a bank and easier for customers to move between banks.
ABOUT THE EXPERTRebecca Smith
Rebecca is a reporter for Business Advice. Prior to this, she worked with a range of tech, advertising, media and digital clients at Propeller PR and did freelance work for The Telegraph.