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The Bank Levy (Loss Absorbing Instruments) Regulations 2020

S.I. 2020/1188 · Made 29 October 2020 · Extends to United Kingdom

Up to date with all changes known to legislation.gov.uk, revised to 1 January 2026.

Bank Levy

Made 29th October 2020

Laid before the House of Commons 30th October 2020

Coming into force 22nd November 2020

The Treasury make the following Regulations in exercise of the powers conferred by paragraphs 15V(3)(b), 15V(4)(b), 15W(4)(b), 15W(7) and 15Y(2) of Schedule 19 to the Finance Act 2011f1.

Annotations to the whole text

Footnotes

f1

2011 c. 11. Paragraphs 15V to 15Y were inserted into Schedule 19 by paragraph 2 of Schedule 9 to the Finance Act 2018 (c. 3) with effect for chargeable periods ending on or after 1st January 2021 so do not yet have effect. Paragraph 30(2) of Schedule 19 was amended by paragraph 9 of Schedule 9 to the Finance Act 2018.

Contents

  1. 1Citation, commencement and effect
  2. 2Interpretation
  3. 3Loss absorbing instruments issued by overseas subsidiaries
  4. 4Loss absorbing instruments issued by overseas subsidiaries
  5. 5Loss absorbing instruments issued by overseas subsidiaries
  6. 6Loss absorbing instruments issued by overseas subsidiaries
  7. Signature
  8. Explanatory note

1Citation, commencement and effectI1

(1)

These Regulations may be cited as the Bank Levy (Loss Absorbing Instruments) Regulations 2020 and come into force on 22nd November 2020.

(2)

These Regulations have effect in relation to chargeable periods ending on or after 1st January 2021.

2InterpretationI1

In these Regulations—

  • “Capital Requirements Regulation”f1 has the meaning given in paragraph 30(4) of Schedule 19,

  • F1“PRA Rulebook” means the rulebook published by the Prudential Regulation Authority containing rules made by that Authority under the Financial Services and Markets Act 2000 as that rulebook has effect on 17 August 2022,

  • “relevant requirement” means—

    1. (a)

      a requirement imposed by the Bank of England—

      1. (i)

        by a direction given under section 3A of the Banking Act 2009f2, and

      2. (ii)

        for the purpose of complying with the duties set out in Part 9 of the Bank Recovery and Resolution (No. 2) Order 2014f3,

    2. (b)

      a requirement imposed under article 92 F2... of the Capital Requirements Regulation,

    3. (c)

      in relation to requirements imposed by an authority in exercise of its regulatory functions under the law of a country or territory outside of the United Kingdom, a requirement imposed under a comparable scheme for a comparable purpose to paragraph (a) or (b) within that country or territory, and

  • “Schedule 19” means Schedule 19 to the Finance Act 2011.

3Loss absorbing instruments issued by overseas subsidiariesI1

(1)

Equities and liabilities that meet the description set out in paragraph (2) are specified for the purposes of paragraph 15V(3)(b) of Schedule 19.

(2)

So much of the equities and liabilities that—

(a)

would have fallen within the definition of Tier one capital equities and liabilities within the meaning of paragraph 30 of Schedule 19, but

(b)

do not fall within that definition because an amount in respect of those equities and liabilities was deducted—

(i)

under F1Article 36 of Chapter 3 of the Own Funds and Eligible Liabilities (CRR) Part of the PRA Rulebook or Article 56(d) of the Capital Requirements Regulation, and

(ii)

in respect of a loss absorbing instrumentf1 issued by a non-UK resident entity which is a subsidiary of a UK resident entity within paragraph 15W(5) of Schedule 19.

4Loss absorbing instruments issued by overseas subsidiariesI1

(1)

A loss absorbing capacity or recapitalisation requirement that meets the condition set out in paragraph (2) is specified for the purposes of paragraph 15V(4)(b) of Schedule 19.

(2)

The requirement must be a relevant requirement.

5Loss absorbing instruments issued by overseas subsidiariesI1

(1)

The condition in paragraph (2) is specified for the purposes of paragraph 15W(4)(b) of Schedule 19.

(2)

The instrument, or an asset representing the instrument, must be held by a UK resident entity for the purpose of satisfying a relevant requirement imposed on a member of the relevant groupf1.

6Loss absorbing instruments issued by overseas subsidiariesI1

(1)

The condition in paragraph (2) is specified for the purposes of paragraph 15W(7)(b) of Schedule 19.

(2)

The liabilities are in issuance for the purpose of satisfying a relevant requirement imposed on a member of the relevant group.

Signature

Rebecca Harris

Maggie Throup

Two of the Lords Commissioners for Her Majesty’s Treasury

Explanatory note

(This note is not part of the Regulations)

These Regulations provide for the circumstances in which loss absorbing instruments issued by overseas subsidiaries of UK resident entities can be deducted from equities and liabilities otherwise chargeable to the bank levy.

Regulation 1 provides for citation, commencement and effect. These Regulations have effect in relation to chargeable periods ending on or after 1st January 2021. Regulation 2 provides for interpretation and defines the relevant requirements.

Regulation 3 provides that, in respect of financial entities, if equities and liabilities would have been “Tier one capital equity and liabilities” (i.e. the amount falling within paragraph 15V(3)(a) of Schedule 19) but for deductions made under Articles 36(1)(i) or Article 56(d) of the Capital Requirements Regulation then those equities and liabilities are specified for the purposes of 15V(3)(b) of Schedule 19.

Regulation 4 provides that a loss absorbing instrument issued by an overseas subsidiary must meet the relevant requirements in order to be specified.

Regulation 5 provides that the UK resident entity must hold the loss absorbing instrument, or an asset representing the instrument, for the purpose of satisfying a relevant requirement.

Regulation 6 provides that the liabilities issued by a UK resident entity in respect of that instrument must be in issuance for the purpose of satisfying a relevant requirement.

A Tax Information and Impact Note covering this instrument will be published on the website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.