New 8% surcharge called unfair by small banks.
M2 EQUITYBITES-September 14, 2015-New 8% surcharge called unfair by small banks
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The heads of a number of the UK's newer and smaller banks are meeting officials from the Treasury to complain that a new surcharge on profits is unfair, the BBC reported on Friday.
Following the July Budget, banks will need to pay an 8% tax charge on profits over GBP25m, beginning in 2016. At the same time the bank levy, which affects larger banks, is to be reduced.
Small banks are arguing that the new tax will harm their ability to lend money and they want to see it reformed. Chief executive of Secure Trust Bank Paul Lynam said "The only way to address the too-big-to-fail problem is to foster the development of smaller banks".
Chancellor George Osborne has argued that the new 8% surcharge is fair and will increase competition. Calculated according to the size of a bank's balance sheets, the bank levy is to be reduced to 0.18% in January from 0.21% now and will be cut further.
In July, Osborne said that in six years time the levy would only apply to the UK operations of a bank after HSBC threatened to move its headquarters outside of the UK and larger banks complained that they were penalised.
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