Bank of England Levy

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.

The Bank of England's (the Bank) Court sets the Bank’s strategy and compiles its medium-term spending plans within its financial framework, in fulfilling its responsibilities under the Bank of England Act 1998. The costs of running the Bank are allocated to different groups of levy/fee payers proportionate to the activity undertaken in fulfilling its statutory objectives. The Bank’s costs in aggregate are subject to tight cost control and are budgeted within constraints set by Court. 

The allocation of these costs between different levy/fee payers will change year-on-year as the Bank balances strategic operational investment priorities and the costs of running the Bank’s day-to-day operations. Each year there will be a rebalancing between different levies/fees to reflect this.

Almost all (c.97%) of the Bank’s operational P&L costs are recovered through the Bank’s direct levies and fees, which include the BoE Levy, PRA Levy, and Other eg management fees for Banknotes and the RTGS tariff. The remaining 3% is funded through Customer Banking charges.

Year-on-year, total levies/fees have increased by 3%. Within this, the BoE Levy has increased by 4%, the PRA Levy has decreased by 1% and Other Levies/Fees have increased by 4%.

The table below shows the total amounts to be collected via levies and fees in respect of the 2025/26 financial year:

For the financial year 2025/26, there is a £29million/3% year-on-year increase in the Bank’s costs to be recovered via levies and tariffs, which has differing impacts across the Bank’s funding streams:

• within the BoE Levy of £596million, operational costs have increased £30million/10% from £298million to £328million, balanced by a decrease of £8m/3% in transitional costs and true-ups from £276m to £268m - per the BoE Levy Notification Document below.  

• the PRA Levy has decreased £3million/1% from £353m to £350m – per the PRA fees policy statement.

• Other Levies/Fees, totalling £236million, has increased by £10million/4% driven by the banknote programme and an increase to the RTGS Tariff as the Bank begins to recoup the build costs of the new enhanced system.

Bank of England Levy Notification Document

2025/26 Anticipated Levy Requirement (ALR) and comparison with 2024/25

The total Anticipated Levy Requirement (ALR) for 2025/26 is £596million. This is comprised of £328million in operational policy costs, £271million for the cost of transition¹ and (£3million) for true up amounts (relating to the 2024/25 Levy Year).

The BoE Levy is the budget required by the Bank to advance its statutory objectives for monetary policy and financial stability. The Bank’s 2025/26 budget for operational policy costs is £30million higher than the budget for 2024/25. This is due to inflation and a higher proportion of the operational investment portfolio being allocated to the BoE Levy. The OIS Forward Curve as at 1 June 2024 was used to calculate the costs of transition. Where the actual path of Bank Rate has differed from this, an over recovery of transition costs for 2024/25 has arisen of £5million. By contrast, the Bank under recovered its operational policy costs in 2024/25, collecting £298million of the required £300million.

The £596million ALR for 2025/26 is an increase of £22million/4% compared to the ALR for 2024/25.  

Note: Total Eligible Liabilities (TEL) value for 2025/26 is: £3,268,743m  

Next steps

Levy Payers will receive an invoice outlining their contribution to the Levy for the 2025/26 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.

• Bank of England Levy Framework document

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.

<sup>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.</sup>