By Matt Scuffham and Steve Slater LONDON (Reuters) – Banks will pay 4 billion pounds more in tax over the next five years under changes announced in the autumn report, Chancellor of the Exchequer George Osborne said on Wednesday. Osborne said he would change rules allowing banks to offset losses from the 2007-09 financial crisis from profits tax for future years, which had meant some banks would pay no tax for 15 or 20 years. “Banks received public support during the crisis and should now also support the public in the recovery. I am limiting the share of profits of established banks that can be offset by loss carryforwards to 50 percent and deferring the offset of bad debts,” Osborne said. Jonathan Richards, a director at EY, called the move, which will also affect international banks with offices in Britain, “unexpected and significant.” “It is likely to mean significant additional cash tax costs for the banking sector over the next few years,” he said. Britain’s five biggest banks – Lloyds Banking Group, HSBC, Barclays, Royal Bank of Scotland and Standard Chartered – have over £17 billion of loans on their books on which tax is deferred, although some of these include overseas assets subject to local tax laws. In Britain, RBS had £2.4 billion of deferred tax assets at the end of 2013, Barclays had £499 million, HSBC had £255 million and Standard Chartered £110 million. Lloyds did not give separate figures for Britain but has £5 billion of deferred tax assets in total, most of them in Britain. “Lloyds appears to be the most affected,” said Ian Gordon, an analyst at Investec. The government also said it had asked Britain’s financial regulator to consider requiring banks to guarantee customers they can switch lenders within five working days, rather than the current seven-day deadline. The move is part of measures to increase competition within the industry. Lloyds shares fell 1.2 percent, Barclays 0.6 percent, HSBC 0.4 percent and RBS 0.1 percent as of 15:55 GMT. Standard Chartered rose 1.5 percent. (Editing by David Holmes and Elaine Hardcastle)
