Overview
On 1 March 2024, the Bank of England Levy replaced the Cash Ratio Deposit scheme as a means of funding the costs of the Bank’s monetary policy and financial stability operations.
Bank of England Levy Notification Document
2024/25 Anticipated Levy Requirement (ALR) and comparison with 2023/24
The total Anticipated Levy Requirement (ALR) for 2024/25 is £574m. This is comprised of £298m in operational policy costs and £276m for the cost of transition1.
The BoE Levy is the budget required by the Bank to advance its statutory objectives for monetary policy and financial stability. The proposed BoE Levy operational policy costs for 2024/25 is £38m higher than the budget for 2023/24 of £260m. The increase is due to inflation, increased investment in the Bank’s data and forecasting capabilities, and increased investment within the Bank’s central and other support capabilities.
Comparison with the November 2023 Consultation Paper:
The Bank provided indicative Policy Costs of £521m in Table A of the November 2023 Consultation Paper on the Bank of England Levy Framework Document2. This £521m comprised of operational policy costs and the cost of transition.
The sterling overnight index swap (OIS) Forward Curve was used to estimate the cost of transition for June 2024. As Bank Rate has remained higher than the OIS Forward Curve at the time of the Consultation, this has resulted in an increase in the cost of transition relative to this estimate.
The £574m ALR is £53m higher than the indicative £521m ALR. True Up is not applied in 2024/25 as there is no prior Levy Year.
| Bank of England Levy 2024/25 | £m |
|---|---|
| Anticipated Levy Requirement | |
| Operational policy costs | 298 |
| Cost of transition | 276 |
| True Up | |
| Operational policy costs | - |
| Cost of transition | - |
| Bank of England Levy | 574 |
Next steps:
Levy Payers will receive an invoice outlining their contribution to the Levy for the 2024/25 Levy Year. Payment of the Bank of England Levy must be made within 30 days of invoice receipt.
Bank of England Levy Framework Document
The Bank of England Levy Framework Document outlines the Bank’s approach to levying the costs of its policy functions in pursuit of its Financial Stability and Monetary Policy objectives.
The Levy will be applied on a proportional basis, which means that the Bank will allocate the policy costs to be recovered by the Levy in proportion to an eligible institution’s liability base. This will be a continuation of how the Cash Ratio Deposit scheme operated. The policy rationale for using the eligible liability base is the link between the size of a financial institution’s liabilities and its potential impact on the Bank’s financial stability and monetary policy functions.
The Bank issued a Policy Statement on the 25 January 2024 confirming the responses received to its Consultation Paper on the Bank of England Levy Framework Document.
Our Statistical Reporting page provides information and guidance for firms on reporting their eligible liabilities.
Any queries on the Bank of England Levy should be sent to BoELevy@bankofengland.co.uk.
Terms and conditions Cash Ratio Deposit (CRD) scheme
The CRD scheme funded the Bank of England’s monetary policy and financial stability functions between 1998 and 2024.
Under the scheme, banks and building societies with eligible liabilities greater than £600 million were required to place a proportion of their deposit base with the Bank on a non-interest bearing basis. The Bank then invested these funds in interest bearing assets (mainly gilts) and the income generated was used to fund the Bank’s monetary policy and financial stability functions. Details on the proposals and consultation process for moving to the Bank of England Levy can be found in paragraph 1.2 in the Bank of England Levy Framework Document.
1. The net interest cost of retaining the legacy Cash Ratio Deposit gilt portfolio, as outlined in paragraph 1.13 of the Bank of England Levy Framework Document.
2. Consultation Paper, Bank of England Levy Framework Document, 8 November 2023.