Risk & Economy » Tax » Tyrie turns up heat on Osborne over bank ‘tax’

A POORLY-EXECUTED bank surcharge could harm competition in the market, the Treasury Select Committee Andrew Tyrie has warned. 

The Conservative MP for Chichester claimed there is a danger for “unintended consequences” under the current proposals, City AM reports.

“Anything which reduces banking competition reduces the scope for new entrants into a market that is not widely held to be sufficiently competitive and would not be in the interests of consumers,” Tyrie said.

The 8% surcharge replaces the unpopular bank levy, which saw financial institutions including HSBC threaten to quit the UK, and is likely to be based on what the firms currently pay in corporation tax as it is phased in over the coming eight years.

According to an HMRC document released following the chancellor’s Summer Budget, the changes will bring in £415m for the Exchequer in 2016/2017, £555m in 2017/2018, £365m in 2018/2019, £225m in 2019/2020 and £105m in 2020/2021.

Tyrie harbours concerns the plans in their current form could unfairly penalise challenger banks and building societies.

This week, Nationwide Building Society cautioned in its interim management statement for the first quarter of 2015 that the move would cost a net £300m over five years – equivalent to the capital required to support about £10bn of lending.