Autumn Budget 2021 - Banking & Capital Markets

The FS team looks closely at what direct effects the Autumn Budget will have on the bank profits surcharge, securities and expansion of the dormant asset scheme.

Bank profits surcharge

Following a review announced in the March Budget, bank profits surcharge is reduced from 8% to 3%, with effect from 1 April 2023. The aim of the reduction is to maintain the competitiveness of the UK as a host jurisdiction for the international banking sector. Together with the 25% corporation tax rate which comes in on that date, the combined rate for banks with profits above the annual allowance will total 28% (as compared with 27% currently).

Securitisations and insurance-linked securities

This legislation will have no immediate impact. The Treasury will be given the power to issue secondary legislation making changes to stamp duty and stamp duty reserve tax rules on securitisation and insurance-linked securities arrangements. Rates of SD and SDRT are currently 0.5% in some cases and 1.5% in others. The aim is to reduce the cost and complexity for such arrangements. The government will have a flexible power to legislate in response to needs identified under the consultation on the taxation of securitisation companies, initiated in March. 

Expansion of dormant assets scheme

The Dormant Assets Bill currently going through Parliament aims to expand the range of assets beyond the scope of the existing scheme, which has been in place since 2008. In relevant circumstances, dormant assets are transferred to the National Lottery Community Fund. Currently, the tax law empowers HMRC to issue regulations covering dormant bank and building society accounts. This power is to be extended to embrace a wider range of assets. Meanwhile, the CGT rules are to be amended so that where an asset is monetised, any chargeable gain or loss is deferred until such time as the actual owner of the assets comes forward and succeeds in making a restitution claim.