Victoria Heard, Banking Tax Partner, KPMG, said:
“Today’s announcement to further restrict how banks can offset their losses is more bad news for the sector - the existing ability to offset 50% of their profits with losses will be reduced to 25% from 1 April 2016. This is only a timing difference, in that these losses will be used up against profits eventually, but it will accelerate the tax take to the treasury at the Bank’s expense.
“The announcement of interest relief restrictions as an anti-tax avoidance measure will have a knock-on effect on bank lending. It will change the economics of borrowing for bank’s corporate customers, and so banks will have to review lending criteria and credit assessments, adding further pressure on their already squeezed margins.”
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Christina Bridge, KPMG Corporate Communications
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