Explanatory note

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.