Barclays post-tax profit to take £1bn hit from US tax changes; future earnings to see positive impact

Barclays said on Wednesday that annual post-tax profit will be hit by a one-off charge of around £1bn as a result of the changes to US tax laws that kick in in January, which include a reduction in the corporate income tax rate to 21% from 35%.

The bank also expects its group common equity tier 1 ratio to drop y around 20 basis points, while tangible net asset value per share is seen declining by approximately 6 pence. These estimates are all calculated based on Barclays' financial information as at 30 September 2017 and will be accounted for in the financial year ended December 2017.

But Barclays said the reduction in the statutory US federal rate is expected to "positively impact" its future US after tax earnings.

“However, the ultimate impact is subject to the effect of other complex provisions in the Act (including the Base Erosion and Anti-Abuse Tax (‘BEAT’), which Barclays is currently reviewing, and it is possible that any impact of BEAT could significantly reduce the benefit of the reduction in the statutory US federal rate.

“Due to the uncertain practical and technical application of many of these provisions, it is currently not possible to reliably estimate whether BEAT will apply and if so, how it would impact Barclays.”

At 0945 GMT, the shares were up 0.5% to 203.10p.