To ask Her Majesty’s Government what steps they plan to take to clarify the tax rules relating to fines imposed on banks.
Answered on
23 February 2016
Fines imposed as a punishment by regulators are non-deductible for UK Corporation Tax purposes, while compensation expenditure arising from trading activity is in principle deductible.
However, the government took steps in Finance Act (No2) 2015 to make compensation associated with bank misconduct and mis-selling non-deductible and offset the deductibility of administrative costs associated with this compensation through a taxable receipt. This action is forecast by the OBR to increase banks’ tax payments by around £1bn over the next 5 years.
Answered by
Treasury