Economic Crime Levy charge increase for entities with UK revenue over 拢1 billion
Published 6 March 2024
漏 Crown copyright 2024
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Who is likely to be affected
Entities regulated for anti-money laundering (AML) purposes under the Money Laundering, Terrorist Financing and Transfer of Funds Regulation 2017 that are very large in size based on their UK revenue. An entity is classified as very large if its UK revenue for the relevant accounting period is more than 拢1 billion.
The main sectors that we expect will be impacted are:
- credit institutions
- financial institutions
- auditors, insolvency practitioners, external accountants and tax advisers
- independent legal professionals
- trust or company service providers
- estate agents and letting agents
- high value dealers, casinos, auction platforms and art market participants
- crypto-asset exchange providers and custodian wallet providers
- any other entity which is regulated for AML purposes due to the nature of its business (or any part of its business)
General description of the measure
The government will increase the charge paid by businesses with UK revenue greater than 拢1 billion under the Economic Crime (Anti-Money Laundering) Levy (鈥榯he levy鈥�). The charge for these entities will rise from 拢250,000 to 拢500,000 with effect from April 2024. As is currently the case, payments for 2024 to 2025 will be due in the following financial year.
There will be no change to the charge for small entities (which remain exempt), medium entities (which will continue to pay 拢10,000), or large entities (which will continue to pay 拢36,000). The size bands will also remain unchanged.
Policy objective
The Economic Crime (Anti-Money Laundering) Levy (鈥榯he levy鈥�) was introduced as part of the government鈥檚 wider objective, contained in both the 2019 Economic Crime Plan (ECP) and the more recent Economic Crime Plan 2 (ECP2), to put in place long-term sustainable funding to tackle economic crime.
Levy receipts for the period April 2022 to March 2023 (collected from entities in the financial year from April 2023 to March 2024) show a shortfall against the levy鈥檚 target of raising 拢100 million per year. 聽This measure is intended to mitigate that shortfall while minimising impact on affected entities. By only increasing the rate paid by 鈥榲ery large鈥� entities, the government is ensuring that levy rates remain below 0.1% of revenue for all entities (and below 0.05% of revenue for 鈥榲ery large鈥� entities).
Background to the measure
The levy was announced at Budget 2020 and came into effect from April 2022. The first payments (covering the period April 2022 to March 2023) were made in the financial year running from April 2023 to March 2024.
Detailed proposal
Operative date
The higher levy rate for very large entities which are regulated for AML purposes will first be charged in the financial year running from April 2024 to March 2025.聽 It will first apply for entities who fall in the very large band by reference to their revenues for an accounting period ending on or after 1 April 2024.
Current law
Current law is contained in Part 3 of the Finance Act 2022 and The Economic Crime (Anti-Money Laundering) Levy Regulations 2022.
The levy is charged on entities that are regulated for anti-money laundering (AML) purposes. The amount payable is determined by reference to an entity鈥檚 size based on their UK revenue from accounting periods ending in that year. Amounts are payable following the end of each financial year.
The levy will continue to be paid as a fixed fee based on the size band an聽AML-regulated entity falls into based on their UK revenue.
The 4 size bands, which will remain unchanged, are:
- small (under 拢10.2 million UK revenue)
- medium (拢10.2 million to 拢36 million)
- large (拢36 million to 拢1 billion)
- very large (over 拢1 billion)
There will be no other changes to the operation of the levy, or the manner in which UK revenue is defined and calculated; the government first consulted on these matters between July and October 2020, and then ran a technical consultation on the draft legislation between September and October 2021. The government has committed to carry out a comprehensive review of the levy鈥檚 operation by the end of 2027.
Proposed revisions
The levy charge for very large entities is set out in section 54(2)(c) of the Finance Act 2022. This section will be amended to allow for a charge of 拢500,000 in the case of an entity whose UK revenue for the relevant financial year is greater than 拢1 billion.
Summary of impacts
Exchequer impact (拢million)
| 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 |
|---|---|---|---|---|---|
| 鈥� | +25 | +25 | +25 | +25 | +25 |
These figures are set out in Table 5.1 of Spring Budget 2024 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Spring Budget 2024.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure is not expected to impact on individuals as it only affects entities regulated for anti-money laundering (AML) purposes under the Money Laundering, Terrorist Financing and Transfer of Funds Regulation 2017 that are very large in size based on their UK revenue. It is not expected that that the levy fees will be passed onto consumers.
This measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that this measure will have any impacts for groups sharing protected characteristics.
Impact on business including civil society organisations
An estimated 100 to 110 businesses which are very large entities and regulated for anti-money laundering (AML) purposes will now be required to pay an increased levy charge, rising from 拢250,000 to 拢500,000 per annum.
Administrative impacts on these businesses are anticipated to be negligible, as no other aspects of the levy鈥檚 calculation or operation are changing. One-off costs will include familiarisation with this change. There are not expected to be any further one-off or continuing costs.
Customer experience is expected to remain broadly the same as this measure does not alter how businesses interact with HMRC.
The same impacts may also apply to a small number of civil society organisations, where these organisations are regulated for AML purposes and very large based on their UK revenue.
Operational impact (拢 million) (HMRC or other)
The levy is being collected by the 3 statutory anti-money laundering supervisors: HM Revenue and Customs (HMRC), the Financial Conduct Authority (FCA), and the Gambling Commission.
We do not expect additional operational impacts as a result of this change.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The聽government will undertake a review of the levy by the end of 2027, which may consider matters such as whether the levy: is meeting its original policy objectives; should continue; should remain based on just the AML-regulated sector; and, is still being calculated and collected appropriately.
Further advice
If you have any questions about this change, contact the Economic Crime Strategy Unit email at [email protected].