In 2023, a new economic crime levy was introduced. It is an annual charge which applies to firms which are subject to money laundering supervision and whose UK turnover exceeds £10.2m. In this news alert, Partner Corinne Staves provides a timely reminder about the levy and the implications for firms.
By way of reminder, the thresholds to pay this levy are as follows:
| Band size | UK revenue | Annual levy payable |
| Small | under £10.2m | None |
| Medium | £10.2 million to £36 million | £10,000 |
| Large | £36 million to £1 billion | £36,000 |
| Very large | more than £1 billion | £250,000 |
The collection authority differs for different organisations. HMRC is still the collecting authority for firms regulated by the Law Society, ICAEW, CIMA, CILEX and others. The FCA is the collecting authority for businesses that it regulates.
What do firms needs to do?
The action required depends on whether or not a firm was required to register and pay the levy last year.
- Firms which paid the levy last year and which need to pay it again this year do not need to register again, but they will need to submit a return and pay the correct levy by 30 September.
- Firms which registered last year must submit a return every year, even if their UK turnover for this year has not met the £10.2m threshold to pay the levy.
- Firms with a UK turnover in excess of the £10.2m threshold for the first time must register, submit a return and pay the levy by 30 September.
What are the implications for firms?
Firms need to consider carefully their ‘UK turnover’ in order to establish the correct sum payable by 30 September, if any. Some firms have changed their accounting reference date in response to basis period reform changes and should ensure they take into account that change in calculating their UK turnover and therefore the sum due.
Failure to pay the levy before the deadline may result in interest and penalties. Firms will also have to consider if the failure represents a reportable breach of any regulatory obligations.
Given that the levy correlates to revenue, firms are unlikely to consider this annual levy an unmanageable cost or a threat to cash flow. However, this is another administrative burden. Feedback from 2023 indicated there was not widespread awareness of the introduction of this new levy. Some law firms wrongly assumed that because the obligation was to register with HMRC, registering for the levy was incorporated in the range of support offered by their tax agent. This may suggest that there may have been accidental failure to comply by some firms, so some firms may need to rectify this when they make their 2024 submissions.
Very large firms should also note that in response to lower than expected levy receipts, the annual levy will increase to from £250,000 to £500,000 for 24/25. It will apply to the (few) entities who fall into the very large band by reference to UK turnover for an accounting period ending on or after 1/4/24. A comprehensive review of the levy’s overall operation is expected by the end of 2027.
Further information on the economic crime levy can be found in our bulletin from 2023 here.
If you have any questions arising from this alert or wish to discuss the levy in more detail, please contact Partner Corinne Staves.
