Who pays for the Bank of England?

This page was last updated on 30 October 2019

Where does our funding come from?

Some of our funding comes from printing banknotes. While we only spend a few pence to print each note, banks buy them from us at their face value: £5, £10, £20 or £50. We invest this money in financial assets like government debt, which pays interest and so generates an income.

Banks and building societies also fund our work to set interest rates and protect the financial system. We require that they place an interest-free deposit with us. Just like printing banknotes, we earn an income by investing the deposits in financial assets that pay interest.

Banks, building societies and insurance companies also pay us a fee to cover the cost of regulating their activities. So do financial market infrastructure firms like Visa and Bacs.

We also receive income from the financial assets we have bought over our 325-year history.

What do we do with our profits?

All of the profits we make from printing banknotes are passed back to HM Treasury. Over the past five years that has averaged a little over £400 million each year.

What we do with the rest of our profits depends on how much financial resources (called capital) we have.

We need capital to use as a buffer to absorb losses. For example if a bank fails to pay us back or if something we own decreases in value. Similarly, you might have a savings account to rely on if your car breaks down.

If we’re below a target level of capital set with the agreement of the Treasury, we keep all the profits that year and add this to our capital.

If our capital is above target but below a ceiling level, we give half of our profits to the Treasury and add half to our capital. And if our capital is above the ceiling, we give all our profits to the Treasury. They can then spend it on things like roads, schools and hospitals, or use it to reduce taxes.

Over the past five years, the profit from our activities other than printing banknotes has averaged a little over £75 million each year.

So combined with the profit we make from printing banknotes each year we give around £500 million back to the public through HM Treasury.