Chancellor John Healey has confirmed that the banking surcharge will increase by 3% in order to fund headline measures to reduce energy bills this winter.<\/p>\n
That will be on top of the 25% corporate tax rate, and increases the so-called bank levy – a small percentage charged on loans – to 6%. There had been speculation that this would be returned to the 8% level it had stood at until 2023; which was then cut back by the most recent Conservative administration.<\/p>\n
Laying out the Labour government’s fiscal plans, Healey prefaced the change by stating that the UK’s “world-leading banks make a huge contribution” to the economy during “global economic storms” and that “I want to celebrate and am grateful for the role you play”.<\/p>\n
However, he continued that was looking to the banking sector to help fund “breathing space” for people facing a cost-of-living-crisis.<\/p>\n
The move will be time-limited, starting in January and ending 15 months later, Healey clarified.<\/p>\n
It comes as banks released healthy financial statements this week.<\/p>\n
Barclays admitted tax hikes would be “bearable” as it reported a 12% year-on-year rise in pre-tax profits to \u00a32.3bn.<\/p>\n
HSBC posted a 32% rise in third quarter profit on Tuesday, benefiting from favourable interest rates, \u200bwhile avoiding credit losses. Pre-tax profits came in at $9.6bn from July to September, with a planned share buyback of \u2060up to $1bn reiterated.<\/p>\n
Lloyds is forecast to report a near doubling of its third quarter profit on Thursday, with analysts suggesting the group will show a pre-tax profit of \u00a32.3bn; up from \u00a31.2bn a year ago. NatWest is also expected to report an operating pre-tax profit of \u00a32.2bn.<\/p>\n
The surcharge is estimated to deliver a combined 2027 hit of almost \u00a3900m for Lloyds, NatWest, Barclays and HSBC.<\/p>\n
The existing 3% bank surcharge raised \u00a31.2bn for the Treasury during 2025-26, and each percentage-point increase is estimated to raise a further \u00a3400m annually.<\/p>\n
Sandy Begbie, chief executive of Scottish Financial Enterprise, commented: “Raising levies on the banking sector is politically expedient, but the truth is increasing taxes on a sector that plays such a key role in driving growth is symptomatic of a desire to prioritise short term popularity over long term economic priorities.<\/p>\n
“It sends the wrong message to investors and risks giving the impression that when a business or sector becomes too successful, it automatically becomes a target for the treasury.<\/p>\n
“While the time limitation on the increase is a welcome ambition, governments tend to find it harder to wean themselves off such revenue streams once they are introduced and the government should set out a clear path to equalising bank tax to that of other businesses.”<\/p>\n","protected":false},"excerpt":{"rendered":"
The change is being made to help fund energy bill support this winter<\/p>\n","protected":false},"author":278857,"featured_media":48423,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[120782,127685],"coauthors":[137126],"class_list":["post-48422","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-financial-services","tag-featured-story","tag-national"],"yoast_head":"\n