Economic Crime Levy – does your business need to pay?

In the 2024 Spring Budget the then Chancellor, Jeremy Hunt, announced a change to the Economic Crime Levy (ECL). In a nutshell, ‘very large’ businesses with UK revenue of more than £1 billion had to pay an annual levy of £500,000 from April 2024. This was a 100% increase from the former rate of £250,000. ‘Small’ entities remained exempt from the charge. ‘Medium’ entities continued to pay £10,000, and ‘large’ entities continued to pay £36,000.

However, accounting body ICAEW has reported that HMRC is now writing to entities that it thinks should have paid the 2023 levy, but haven’t. It is currently writing to entities that it supervises under the Money Laundering Regulations (MLR). Some entities are supervised by other bodies. HMRC will write to them later this year.

Given that the Economic Crime Levy is in the spotlight, we’ve compiled this article to explain what the ECL is, and whether your business needs to register and pay it.

What is the Economic Crime Levy?

The Economic Crime Levy is an annual charge that affects organisations that are supervised under the Money Laundering Regulations. It is paid by entities that have UK revenues of more than £10.2 million per year. The payment bands are as follows:

Small entities don’t need to register with HMRC. All other businesses need to submit their ECL return and pay the annual fee by 30th September each year.

Which businesses are supervised under the MLR?

At this point, you may be wondering whether your business should be supervised under the Money Laundering Regulations (MLR). You can find more details on this topic here.

That said, HMRC is the supervisory authority for the following:

• Money service businesses that aren’t supervised by the Financial Conduct Authority (FCA)
• High value dealers handling cash payments of €10,000 or more in single or linked transactions
• Trust or company service providers not supervised by the FCA or a professional body
• Accountancy service providers not supervised by a professional body
• Estate agency businesses
• Bill payment service providers not supervised by the FCA
• Telecoms, digital and IT payment service providers not supervised by the FCA
• Art market participants buying or selling artworks with single or linked transactions of €10,000 or more.
• Letting agency businesses renting property or land valued at the equivalent of €10,000 or more per month

The Financial Conduct Authority is the supervisory authority for businesses such as lenders, money brokers, traders in foreign exchange, financial futures and options, plus portfolio management advisers. The Gambling Commission is the supervisory authority for gambling businesses. Businesses in sectors such as accountancy, law and tax advice are usually supervised by professional bodies such as the Institute of Chartered Accountants in England and Wales (ICAEW) or the Solicitors Regulation Authority (SRA).

While registering for MLA looks simple, it isn’t always so. For example, some businesses supervised by HMRC also need to be registered or authorised by the FCA. You also need to tell HMRC about different premises you owe, and you may have to pay fees for each. You can find out more by reading HMRC’s guidance on who needs to register for money laundering supervision.

Need help with MLA or ECL

Hopefully, this short guide will have given you insight into both the Economic Crime Levy and the Money Laundering Regulations. It can be a complex business making sure you are compliant with the regulations, so if you are a THP client do feel free to ask one of our accountants for advice. Similarly, if you’ve received a letter from HMRC saying it thinks you should have paid the ECL, get in touch today. We’ll be able to help you understand whether the ECL applies to you.