Autumn Statement 2014: Banks get clobbered (again)

Autumn Statement 2014: Banks get clobbered (again)

Jane McCormick, head of tax at KPMG in the UK, comments on measures unveiled today to restrict the extent to which banks are able to offset losses

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Commenting on measures unveiled today to restrict the extent to which banks are able to offset losses, Jane McCormick, head of tax at KPMG in the UK, said:

“The banks got clobbered again today. Together with multinationals artificially diverting profits, they were the big losers in today’s autumn statement. The announcement today that the extent to which they can offset losses will be restricted to 50 percent of profits in any one year follows earlier measures such as the bankers’ payroll tax and the bank levy. The ‘good’ news for banks is that they can still use these losses. The ‘bad’ news is that it’s going to take them a lot longer because of this annual cap.

“There will be a sigh of relief from the so-called ‘Challenger banks’ as there is an exemption for the first five years of operation meaning that losses incurred in the start up phase are not penalised.

“The announcement reflects a public discomfort with the idea that some banks continue to pay no corporation tax because of losses sustained during the financial crisis. For the banking industry, however, the concern will be that the effect of this cap on offsetting losses is to reduce the amount of cash available for lending. Coupled with other measures announced today to restrict tax relief for bad debts, this risks undermining the government’s stated aim of encouraging new lending.”



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About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 11,500 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and h as 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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