The country’s banks have been landed with an additional tax bill of potentially £3.5bn after the chancellor announced measures to limit how much of their profits they get tax relief on.
In the Autumn Statement, the government said it would take “further action to tackle tax avoidance, and to ensure that all businesses and individuals pay their fair share, including by restricting the amount of banks’ profits that can be offset by carried-forward losses”.
According to the HMRC website, companies get tax relief by offsetting the loss against other gains or profits of your business in the same accounting period.
The statement added it expects the measure to bring in £695m next tax year, £765m in 2016/17, £705m the year after, £695m the year after that and £625m in 2019-20.
“[Businesses] can also choose to carry the loss back or it will be carried forward to another accounting period”, HMRC says.
In his statement, Mr Osborne said tax receipts from the banking sector had fallen from £7.3bn in 2006-07 to £1.6bn in 2013-14.
“The Autumn Statement announces that the government will therefore restrict the amount of banks’ profits that can be offset by carried-forward losses to 50 per cent, increasing banks’ contribution to fiscal consolidation through corporation tax payments,” the chancellor said.
