Gibraltar is set to impose a financial levy on banks doing business in the U.K. after Brexit, said the state's financial regulator.

The British overseas territory on the southern tip of Spain is home to a number of banks, insurance companies and other financial institutions that currently operate across the European Union. When the U.K. leaves the EU as scheduled on Jan. 31 Gibraltar will also leave the bloc.

Following a consultation, the territory’s financial regulator, the Gibraltar Financial Services Commission, set out proposals for a U.K. Single Market Levy payable by all regulated firms that "passport" into the U.K., including bank and insurance firms. It said it is necessary to cover the costs it incurs in preparing for its continued relationship with Britain. Following the end of the consultation period on Jan. 10, the levy is set to be raised on Jan. 20 with firms given 28 days from the invoice date to pay. Among regulated firms in Gibraltar are Gibraltar International Bank Ltd and Banque Lombard Odier & Cie SA.

The GFSC said the extra money was needed to fund its work with the U.K. authorities on securing future access to the U.K. market and on policy issues relating to "inoperable" elements of the cumulative body of EU law.

The regulator is proposing to raise the levy at 12% of the annual regulatory fee so a bank that passports its services into the U.K. and was charged an annual fee of £5,000 will now have to pay an additional £600. GFSC declined to comment.