Taxes Consolidation Act 1997 section 487

Corporation tax: credit for bank levy

Section 487 provides for a corporation tax credit in respect of bank levy payments, allowing banking groups whose tax liability exceeds a baseline threshold to set the levy off against that liability.

• Where a banking group's corporation tax liability for a relevant period exceeds the adjusted group base tax, the group may set all or part of its levy payment against that liability, with the threshold derived from the group's average tax position for the two years to 31 March 1991 and adjusted in line with subsequent profitability.
• Accounting profit for this purpose is the audited profit after tax and before extraordinary items, excluding intra-group dividends, capital gains, profits taxed abroad, and dividends from non-resident companies, with adjustments for corporation tax on foreign income grossed up at the applicable rate and for stamp duty levies already charged.
• The levy set-off is apportioned among group members in proportion to each company's share of the group tax liability, although the group may elect a different apportionment by notifying the inspector within nine months of the end of the relevant period, and the set-off is treated as a payment of corporation tax on its due date but cannot give rise to a repayment.
• Where accounting periods do not coincide with the relevant period, a provisional set-off may be calculated using the parent company's most recent accounting period ending within the relevant period, subject to later adjustment once full details are available, with interest on overpayments repaid and no interest charged on underpayments paid within one month of notification.