Economic Crime Levy

The government uses the Economic Crime Levy (ECL) to raise funds to tackle the increasing threat from economic crime. This article will help you understand if you must pay the levy and what you need to do if you’re affected.

What is the ECL?

The ECL is part of the UK government’s wider objective to develop a long-term sustainable solution to tackle economic crime. The government aims to raise £100 million a year from the ECL to pay for initiatives to tackle money laundering.

Who must pay the ECL?

The ECL is payable by businesses regulated for anti-money laundering (AML) purposes with UK revenue of more than £10.2 million. This means that the ECL affects businesses in sectors which are most at risk of being used by criminals to launder the proceeds of crime. This includes but is not limited to financial institutions, accountants, legal firms, estate agents, casinos and art dealers.

How much is the levy?

The ECL is a fixed fee charged annually for a financial year ie 1 April – 31 March. The amount payable is based on the business’ UK revenue in the accounting period ending in the financial year.

Where an entity is part of a group, the ECL only applies to entities within the group which meet the requirements. Each group member which meets the requirements must register, submit yearly returns and pay separately.

For partnerships, if the levy is applicable, the nominated partners must make an ECL return in the name of the partnership.

The meaning of ‘UK revenue’?

UK revenue is all revenue generated in the UK in accordance with UK generally accepted accounting principles (GAAP). It’s not limited to the turnover of the activity supervised for AML purposes.

How do I report and pay the ECL?

The ECL is collected by either HM Revenue & Customs (HMRC), the Financial Conduct Authority (FCA) or the Gambling Commission (GC), depending on how the business is supervised for AML purposes. Each of the authorities has different processes for administering the levy.

HMRC collects the levy for most businesses (those not supervised for AML purposes by either the FCA or the GC).

Under HMRC’s processes, a business liable to pay the ECL must submit a return detailing its financial activities and pay the levy by 30 September each year.

Before a business can submit their first return and payment to HMRC they must register for the ECL using HMRC’s online service. They will then receive an ECL registration number which they must use when they submit returns.

Key dates

The ECL first applied for the financial year from 1 April 2022 to 31 March 2023 and therefore the first payments were due to HMRC by 30 September 2023.

Under HMRC’s rules businesses must submit their annual return and pay the ECL by 30 September following the end of the financial year for which the levy is due. For example, for the financial year from 1 April 2023 to 31 March 2024, the return must be filed and the payment made by 30 September 2024.

How we can help

If you’d like to discuss whether you need to pay the ECL or you’d like help with your ECL compliance obligations, please get in touch with your usual Saffery contact or speak to Tom Alun-Jones.