The Economic Crime Levy's Rebanded Charges Land This Financial Year, and Band C Is the One Catching Firms Off Guard

TrustSphere Network

7 hours ago

6 min read

FCA building, representing UK financial regulation and the Economic Crime Levy

The Economic Crime (Anti-Money Laundering) Levy has quietly become a much bigger bill for the largest AML-regulated entities, and TrustSphere's view is that the firms most exposed are not the ones you would expect. The largest banks budgeted for this years ago. The businesses now working out that they have jumped into a newly created band with a charge more than ten times their previous one are mid-tier professional and financial services firms sitting just above the £500 million UK revenue line, and several of TrustSphere's clients in that bracket had not modelled the change until finance teams flagged it this summer.

This is not a future-dated speculation piece. The change is settled law, published by HM Treasury and HMRC, and it is already operative for the current financial year. TrustSphere's house view is that the levy restructure will bite hardest not through the headline rate increases, which are modest in percentage terms for most bands, but through the administrative and governance burden of correctly classifying UK revenue at the new band boundaries, particularly for firms whose revenue sits close to the new £500 million and £1 billion thresholds and who face materially different bills either side of that line.

The broader point TrustSphere makes to clients is that the levy has stopped being a rounding-error compliance cost for large regulated firms and has become a line item that finance, not just compliance, needs to own. A levy charge that can move from £36,000 to £500,000 for a firm crossing a single revenue threshold is not a cost any institution can afford to discover late.

What is actually changing

HMRC's own policy paper sets out three changes to the levy's bands and charges, confirmed and published as settled government policy. The band previously called "medium" is renamed Band A and its charge rises from £10,000 to £10,200. The band previously called "large", covering UK revenue between £36 million and £1 billion, is split in two: firms with revenue between £36 million and £500 million become Band B, and firms with revenue between £500 million and £1 billion become a new Band C, carrying a charge of £500,000, a substantial jump from the £36,000 those firms previously paid as part of the old large band. The band previously called "very large", for firms with UK revenue above £1 billion, is renamed Band D and its charge rises from £500,000 to £1 million (see HMRC's policy paper, "Economic Crime Levy: changes to bands and charges").

The change was announced at Autumn Budget 2025 and the higher rates for Bands A, C and D are first charged for the financial year running from April 2026 to March 2027, with first payments under the new rates due by the date set by the relevant collector, which for most regulated firms is either HMRC, the FCA or the Gambling Commission depending on which body supervises them under the Money Laundering Regulations. HMRC's own impact assessment estimates that 100 to 110 businesses will move into the new Band C and see their charge rise from £36,000 to £500,000, and a further 110 to 120 businesses in Band D will see their charge rise from £500,000 to £1 million.

What is settled, and what is still open

The band restructure and new charges are settled law, not a proposal. They sit within the existing legal framework of Part 3 of the Finance Act 2022 and the Economic Crime (Anti-Money Laundering) Levy Regulations 2022, which HMRC's policy paper confirms remains the operative legislation, amended to introduce the new bands rather than replaced. Firms are legally obliged to determine which band applies to them using the FIN074 return process where the FCA is their AML supervisor, and the FCA's own guidance on who needs to complete a FIN074 return confirms that a firm's exposure depends on both its Money Laundering Regulations scope and its calculated UK revenue for the relevant accounting period.

What remains genuinely open, and TrustSphere is careful to flag this as expectation rather than settled fact, is the longer-term future of the levy itself. HMRC's policy paper commits the government to a review of the levy by the end of 2027, which will explicitly consider whether the levy is meeting its original objectives, whether it should continue, whether it should remain based solely on the AML-regulated sector, and whether its calculation and collection methods remain appropriate. That review has not started in any published form as of this post, and any assumption about what it will conclude is speculation, not analysis. Firms should plan for the current bands as settled for at least the 2026 to 2027 and 2027 to 2028 financial years, while treating anything beyond that as genuinely uncertain.

What it means operationally

For finance and compliance teams, the immediate task is recalculating expected UK revenue for the current accounting period against the new band boundaries, not the old ones, because a firm that budgeted based on last year's "large" band charge of £36,000 and now finds itself in Band C faces a fourteen-fold increase it may not have provisioned for. This is a finance function exercise as much as a compliance one, and TrustSphere's engagements this year have repeatedly found that the revenue calculation methodology itself, not just the resulting charge, is where firms make errors, particularly around how group revenue and non-UK revenue are treated.

Governance owners need to confirm which entity within a group structure is legally liable for the levy charge, since the £250 penalty for a late or incorrect FIN074 return under Regulation 20(1)(a) of the 2022 Regulations applies regardless of the size of the underlying levy charge, and HMRC has been explicit that failure to submit correctly risks the levy being charged in error, which then requires a correction process. Firms that treat the FIN074 return as a low-priority annual task are the ones most likely to be caught out by the band restructure, because the return is the mechanism through which HMRC and the FCA determine which band applies.

Systems and data owners should also note that the change carries an operational cost for the collectors themselves. HMRC's impact assessment discloses upfront IT costs of up to £1.2 million to accommodate the new band system, funded through levy revenue, which is a useful reminder that the levy's administration is not free even to the bodies collecting it, and that firms should expect continued refinement of the collection process as HMRC, the FCA and the Gambling Commission bed in the new bands.

What this means for each part of the regulated population

Tier 1 banks in Band D absorb the largest absolute increase, from £500,000 to £1 million, but as a proportion of revenue this remains within the levy's stated 0.1% cap and is unlikely to be a material budget event for institutions of that scale.

Firms newly caught in Band C, typically large professional services firms, insurers and mid-tier banks with UK revenue between £500 million and £1 billion, face the sharpest relative shock, moving from a £36,000 charge to £500,000, and are the group TrustSphere would flag as most likely to have under-budgeted for this financial year.

Smaller AML-regulated firms in Bands A and B see comparatively modest increases, but should not assume the levy is a stable, ignorable cost given the government's own commitment to review the entire regime by the end of 2027.

Regulators and supervisors, principally the FCA, HMRC and the Gambling Commission, carry the operational burden of implementing the new band system correctly and consistently across the population they each supervise, and firms should expect some friction in the first collection cycle under the new structure.

Where this leaves firms now

TrustSphere's conclusion is that the levy restructure is a manageable compliance event for firms that model their exposure correctly and early, and a genuine budget surprise for firms that treat it as an unchanged annual line item. The firms most at risk are not the largest institutions, who have compliance and finance functions built to absorb changes like this, but mid-tier firms crossing the new Band C threshold who may not have a dedicated team tracking levy policy changes at all.

Suggested Next Steps

Recalculate your firm's expected UK revenue for the current accounting period against the new Band A to D thresholds, not the previous medium, large and very large bands.

Confirm which group entity is the legally liable party for the levy and ensure that entity, not a proxy, completes the FIN074 return.

Brief finance leadership specifically on any move into the new Band C, given the scale of the increase from £36,000 to £500,000 for firms crossing that threshold.