Budget 2010: Osborne to raise £2bn through bank tax

Chancellor George Osborne has clamped down on the UK banking sector with a new tax on profits.

The levy will raise £2bn a year in the form of a tax on banks in proportion to the size of their balance sheets. Smaller banks will be exempt from the move, which will come in in January 2011. The UK operations of foreign banks will be liable for the new levy. The safest Tier 1 capital is exempt, essentially meaning the levy is a tax on banks' risk assets. Osborne says: "This was a crisis that started in the banking sector, with huge costs to the rest of society. The banks should make a contribution proportional to their level of risk." Both France and Germany are set to announce s...