PS17/26 – Regulated fees and levies: Rates proposals 2026/27

Policy statement 17/26

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  • CP7/26 – Regulated fees and levies: Rates proposals 2026/27

Published on
08 July 2026

1: Overview

2026/27: Bank of England (the Bank) Fees and Levies

Under the Bank of England Act 1998, the Bank’s Court is responsible for setting the Bank’s strategy and approving its medium-term spending plans within a financial framework.

Almost all (c.97%) of the Bank’s operational costs are recovered through levies and fees. These include the Bank of England Levy, Prudential Regulation Authority (PRA) Levy, financial market infrastructure supervision (FMI) Levy and Other (eg, management fees for Banknotes and the RTGS tariff). The remaining 3% is funded through customer banking charges. In this way, the costs of running the Bank are allocated to different groups of levy/fee payers in proportion to the costs we incur in fulfilling our various statutory objectives.

The Bank’s costs are subject to tight control and are budgeted within constraints set by Court. Overall, the Bank’s operating budget, and the core levies financing it, are constrained to increase by no more than CPI in 2026/27. The Bank’s operating costs and the associated core levies which pay for it are set to rise by 3% in 2026/27 compared with 2025/26. Within this 3% constraint, individual levies will move up or down relative to each other as the Bank balances strategic operational investment priorities and the costs of running the Bank’s day-to-day operations.

	2025/26		2026/27
	Actuals	Budget	Budget
BoE Levy (Operational policy cost component)	£333 million	£328 million	£353 million		2025/26: Actuals broadly flat to Budget 2026/27: Budgeted costs grow year-on-year by 8% due to the Investment portfolio mix
PRA Levy	£350 million	£350 million	£345 million		2025/26: Actuals flat to Budget 2026/27: Budgeted costs reduce year-on-year by 1% due to Investment portfolio mix
FMI Levy	£18 million	*£*17 million	£18 million		2025/26: Actuals broadly flat to Budget 2026/27: Budgeted costs grow year-on-year by 3%
Bank’s Core Levies (constrained within CPI)	£701 million	£695 million	£715 million		2025/26: Actuals broadly flat to Budget 2026/27: Budgeted costs grow year-on-year by £20 million, 3%, within the CPI growth constraint

Cost of Transition: Adjustment to the Bank of England Levy related to the transition away from the legacy Cash Ratio Deposit (CRD) funding model

In addition to funding part of the Bank’s operational costs, the Bank of England levy contains an adjustment reflecting the transition away from the old CRD scheme, as described in the 2024 Bank of England Levy Framework Document.

Under the old CRD scheme, financial institutions were required to hold non-interest-bearing deposits at the Bank. These deposits were reinvested in gilts, and the income from the gilts was used to fund the Bank’s policy functions. Now that the Bank is instead more stably and directly funded via the levies, there is no need for such non-interest-bearing deposits and they were converted into central bank reserves, remunerated at Bank Rate, in March 2024. The corresponding legacy CRD gilt portfolio was transferred to the Banking Department balance sheet at the same time.

At that time, a transitional adjustment mechanism was agreed to ensure that the Bank’s funding was no longer affected by year-to-year movements in market interest rates. Specifically, when Bank Rate exceeds the investment return on the corresponding legacy CRD gilt portfolio, the financial system is required to return the ‘excess’ interest the Bank pays out on remunerated reserves to the Bank via a ‘Cost of Transition’ adjustment to supplement the Bank of England Levy. Conversely, when Bank Rate is below the investment return on the legacy CRD gilt portfolio, the Bank would use the return it makes on the gilts in excess of the interest it pays out on the corresponding remunerated reserves to reduce the Bank of England levy. This transitional arrangement has no impact on, and is unrelated to, the Bank’s operating costs. Its purpose is solely to ensure that movements in market interest rates do not affect the Bank’s funding or P&L.

Because Bank Rate, and market-derived expectations of it, have risen, the remuneration paid out by the Bank on the reserves associated with the old CRD scheme is forecast to exceed the income generated by the Bank from the corresponding legacy CRD gilt portfolio. To offset this, the Cost of Transition to the Bank of England Levy in 2026/27 is £307 million related to expected interest differentials over the course of 2026/27. There is a prior year adjustment of £40 million of which £36 million relates to the actual Bank Rate differential over 2025/26 relative to the forward overnight index swap curve that was used to project it, and £4 million related to under recovery of actual Operational Policy Costs in 2025/26.

The Bank of England Levy is set at £700 million for 2026/27, and reflects the transition away from the legacy CRD scheme.

The Cost of Transition for 2026/27 represents the excess interest paid by the Bank to Industry on remunerated reserves created through the gross Cost of Transition to the Bank of England Levy (£874 million), less income earned by the Bank on the legacy gilt portfolio (£258 million) and the Cost of Transition which was collected in 2025/26 (£273 million).

The resulting £343 million is therefore the net amount the Bank is recovering from Industry through the Bank of England Levy, separate from £357 million of operational policy costs.

Amounts in £ millions		Anticipated in 26/27	+	Prior Year Adjustment		=		26/27 Budget
Costs of Transition:
Interest paid by the Bank on reserves to Industry		431		444				874
Income received by the Bank from legacy gilts		(124)		(135)				(258)
Balance collected by the Bank from Industry in 25/26		-		(273)				(273)
Costs of Transition		307		36				343
Operational Policy Costs		353		4				357
Total Bank of England Levy		660		40				700

The full set of levies for 2026/27, along with a comparison with those of 2025/26 is shown below.

Budget	2026/27£million	2025/26£million	Movement£million	Movement%	Description
BoE Levy	700	596	104	17%	Increase reflects recovery of excess interest paid by the Bank to Industry in the prior year 2025/26 based on the estimated Interest Rate trajectory for 2026/27 as at May 2026
of which:
Operational Policy Cost	353	328	24	8%
Cost of Transition from CRD	307	271	36	N/A¹
Prior year adjustment for under recovery	40	-3	43	N/A¹
PRA Levy	345	350	(5)	-1%
FMI Levy	18	17	0	3%
Other Fees	226	219	7	3%
Total Levies and Fees	1,289	1,183	106	9%
BoE Levy Cost of Transition & prior year adjustments and other levies outside of CPI constraint	(574)	(487)	(86)
Total Core Levies, constrained within CPI	715	695	20	3%

¹ Not meaningful in percentage terms.

Prudential Regulation Authority final policy statement

1.1This PRA policy statement (PS) sets out its final policy following consultation paper (CP) CP7/26 – Regulated fees and levies: Rates proposals for 2026/27. It contains the PRA’s final policy, as follows:

• the fee rates to meet the PRA’s Annual Funding Requirement (AFR) for the period Sunday 1 March 2026 to Sunday 28 February 2027 (‘fee year’); and
• amendments to the Fees Part of the PRA Rulebook (Appendix 1).

1.2 This PS is relevant to all firms that currently pay PRA fees or expect to do so in the 2026/27 fee year.

Background

1.3 In CP7/26 the PRA proposed:

• the fees rates to meet the PRA’s 2026/27 Annual Funding Requirement (AFR);
• an increase to the cost allocation to fund the PRA’s activities in the Future Banking Data (FBD) programme;
• changes to internal model application fees, the model maintenance fee, the Special Project Fee for restructuring and the new firm authorisation fee for Type 1 (friendly societies and credit unions) and 3 applications (banks, building societies and insurance firms);
• introducing a new internal model application and model maintenance fee (MMF) for Securities Financing Transactions Value-at-Risk (SFT VaR);
• how the PRA intended to allocate the surplus from the 2025/26 AFR; and
• the retained penalties for 2025/26.

1.4 In determining its policy, the PRA considers representations received in response to consultation, publishing an account of them and the PRA’s response (‘feedback’). The PRA did not receive any responses to CP7/26. Details of any significant changes compared to the consultation are also published.

1.5 In carrying out its policy making functions, the PRA is required to have regard to various matters. In CP7/26 the PRA explained how it had regard to the most relevant of these matters in relation to the proposed policy. The ‘Changes to draft policy’ section of this chapter refers to that explanation.

Changes to draft policy

1.6 This PS takes account of how the policy advances the PRA’s objectives and of significant matters that the decision maker had regard to. The changes to the draft policy contained in CP7/26 are deemed to be minor, therefore the PRA’s analysis, as set out in CP7/26, remains unchanged.

1.7 The PRA’s Total Funding Requirement (TFR) for 2026/27 is £345.3 million, £1.3 million (0.4%) lower than the provisional TFR proposed in CP7/26. This reduction reflects a lower budget requirement for workforce adjustment in 2026/27.footnote [1] The TFR is £4.9 million (1.4%) lower than in 2025/26.

1.8 The AFR has decreased by £0.1 million, reflecting the £1.3 million reduction in the TFR offset by a £1.2 million increase to account for lower than budgeted MMF income compared to that expected in CP7/26. The lower MMF income corrects a previous incorrect allocation, which resulted in an overpayment by an individual fee payer.

1.9 Table 1.A sets out the PRA’s TFR for 2026/27 and compares it with the draft TFR set out in CP7/26.

Table 1.A: Estimated Total Funding Requirement for 2026/27 and movement from CP7/26 (*)

£ million	Policy statement	Consultation	Change	Percentage change
Ongoing Regulatory Activities	329.2	329.3	(0.1)	0%
Annual Funding Requirement	329.2	329.3	(0.1)	0%
Model Maintenance Fee	8.4	9.6	(1.2)	(12.5%)
Future Banking Data	6.8	6.8	0.0	0%
Other fees	1.0	1.0	0.0	0%
Other fees to industry	16.2	17.4	(1.2)	(6.9%)
Total Funding Requirement (TFR)	345.3	346.6	(1.3)	(0.4%)

Footnotes

• (*) Rows and columns may not sum due to rounding.

1.10 Table 1.B sets out the allocation of the PRA’s AFR to fee blocks for 2026/27 and compares it with the draft allocation set out in CP7/26 and the allocation for the 2025/26 fee year.

Table 1.B: Allocation of AFR for 2026/27 to fee blocks and comparison to the draft allocation (*)

£ million	Final AFR	Draft AFR	Change	2025/26AFR	Change
Minimum Fees	0.5	0.5	0.0	0.6	(0.1)
Deposit takers	206.4	206.5	(0.1)	210.9	(4.5)
Insurers – general	47.1	47.1	0.0	48.2	(1.1)
Insurers – life	57.3	57.3	0.0	58.5	(1.2)
Managing agents at Lloyd’s	1.9	1.9	0.0	2.0	(0.1)
The Society of Lloyd’s	2.5	2.5	0.0	2.5	0.0
Firms dealing as principal	13.4	13.4	0.0	13.7	(0.3)
	329.2	329.3	(0.1)	336.4	(7.2)

Footnotes

• (*) Rows and columns may not sum due to rounding.

1.11 Table 1.C sets out an analysis of the final tariff data for the 2026/27 fee year, used to allocate the PRA’s AFR to firms within fee blocks compared to the draft data presented in CP7/26.

Table 1.C: Analysis of tariff data for allocation of fees within fee block compared to draft tariff data (*)

Fee block	Tariff basis	2026/27 final number of firms	2026/27 draft number of firms	Mvt to number of firms (%)	2026/27 final tariff data(£ billion)	2026/27 draft tariff data(£ billion)	Mvt to tariff data (%)	Mvt in fee rates from draft (%)
A0	Minimum Fees	916	916	0.0%	n/a	n/a	n/a	-
A1	Modified Eligible Liabilities	655	654	0.2%	4,198	4,197	0.0%	0.0%
A3	Gross Written Premiums (GWP)	316	311	1.6%	99	103	(4.0%)	4.1%
	Best Estimate Liabilities (BEL)	171	171	(0.2%)	0.1%
A4	Gross Written Premiums (GWP)	124	124	0.0%	146	154	(4.9%)	5.0%
	Best Estimate Liabilities (BEL)	1,358	1,239	9.6%	(8.8%)
A5	Active Capacity	57	57	0.0%	60	60	0.0%	0.0%
A10	Total Trading Book Assets	8	8	0.0%	2,518	2,520	(0.1%	0.0%
	Financial & Operating Income	20	20	0.0%	0.0%

Footnotes

• (*) Rows and columns may not sum due to rounding

1.12 The final fee rates for 2026/27 are broadly similar to those stated in CP7/26. The fee rates variance for the A3 and A4 blocks is because the indicative fee rates used for these blocks in CP7/26 were completed using 2025/26 fee tariff data (as the UK Solvency II reporting deadline was after publication of the CP) and have now been calculated using the updated 2026/27 data.

1.13 CP7/26 stated that there was a surplus of £2.0 million on the AFR, including retained penalties of £1.5 million, and a surplus of £0.5 million on Future Banking Data for the 2025/26 fee year. Following the finalisation of the PRA’s annual accounts for 2025/26, both figures remain unchanged. The £1.5 million benefit relating to retained penalties will be applied across all fee blocks excluding those firms who incurred fines.

Implementation

1.14 The implementation date for the PRA Rulebook: PRA Fees Amendment Instrument 2026 is Monday 13 July 2026.

1. Further details provided in the PRA Business Plan 2026/27.

Further details provided in the PRA Business Plan 2026/27.

Appendices

Appendix 1: PRA Rulebook: PRA Fees Amendment Instrument 2026

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