New tax to hit overseas banks

The tax, published in a draft clause to the finance bill yesterday, will add an extra £1bn to Treasury coffers when it comes into affect in January next year.

Currently, overseas branches pay tax that is significantly lower than if it operated through a subsidiary structure. The new tax aims to address this imbalance.

But Deloitte & Touche said it was scared the tax would make Britain less attractive as an international banking centre.

At the same time the British Bankers’ Association is in discussion with the Revenue over the new tax. It wants more details about the draft legislation.

The Revenue said plans to tax overseas branches operating in the UK would create a level-playing field.

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