Many SMEs are worried that SME lending will be hurt by the new banking levy due to the fact it was not carefully constructed. George Osborne announced at this week’s Emergency Budget that banks in the UK will be forced to pay out over £2b as part of a new annual bank levy.
The balance sheet will be paid starting next January by all UK banks, UK building societies, and the UK operations of foreign banks. As such, it will likely be the first levy that will be implemented on a global basis.
CEO of the UK bank Aldermore, Philip Monks, stated that it is not enough to exclude newer banks from the levy because all SME lending should be excluded.
Monks continued to explain that SME lending is a vital component of economic recovery so it is counterproductive to consider taxing any of this funding. Instead, Monks stated that the levy should be placed on banking areas such as casino use that do not benefit the economy.
Aldermore also stated that although SMEs likely will agree with many of the Budget announcements, they will be angered to hear that both the VAT and CGT will increase while capital allowances are going to be reduced.
Monks added that the GCT rise will cause fewer entrepreneurs to consider self-employment as a viable option.