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Senior banking executives expect tax raid on sector in Budget

Senior banking executives expect a tax raid on the sector in the upcoming Budget, despite the sector being described as 'the crown jewels' of the UK economy.

By Simon Jack·Oct 15·bbc.co.uk·1 min read

Intelligence analysis by Qwen 2.5 (3B)

Head and shoulders of John Healey in a crowd, wearing suit and red tie
Head and shoulders of John Healey in a crowd, wearing suit and red tieImage: bbc.co.uk

Senior banking executives predict a tax increase on the UK's largest banks in the upcoming Budget, despite the sector being described as 'the crown jewels' of the UK economy.

Why it matters

The upcoming Budget could see a tax increase on the UK's largest banks, potentially impacting the economy and competitiveness of the sector.

The UK's biggest banks are expected to pay more taxes in the upcoming Budget. This is because the banks are making a lot of money, and the government wants to take some of that money to help pay for things.

Analysis

{"

Bank Levy and Surcharge Reductions":-1998,"The UK government introduced a bank levy and a 3% surcharge on top of the 25% corporation tax rate to raise revenue and address financial stability concerns. The surcharge was reduced from 8% to 3% under Rishi Sunak's tenure as Chancellor, coinciding with a rise in the corporation tax rate from 19% to 25%.":[],"2022, ":"In the past, banks have successfully argued that higher taxes would weaken competitiveness, discourage investment, and work against the government's ambition to deliver growth. The current situation is different, with rising interest rates expanding the margin between lending and savings rates, making the sector more profitable.","2023, ":"There are several ways the Chancellor could extract more money from the sector, including returning the 3% surcharge to its previous level, which could raise around £2bn a year, or implementing a moratorium on the use of past losses to offset current profits, which could yield an estimated extra £1bn per year for the Treasury."}

Key points

  • Senior banking executives expect a tax increase on the UK's largest banks in the upcoming Budget
  • The 3% surcharge on top of the 25% corporation tax rate was reduced from 8% to 3% under Rishi Sunak's tenure as Chancellor
  • There are several ways the Chancellor could extract more money from the sector, including returning the 3% surcharge to its previous level or implementing a moratorium on the use of past losses to offset current profits
The Upside

If the tax increase is managed carefully, it could help the government raise more money without hurting the banks' ability to lend money or create jobs.

The Downside

If the tax increase is too high, it could hurt the banks' ability to lend money and create jobs, which could negatively impact the economy.

Originally reported at

bbc.co.uk

Discernion covers the story. Read the full piece at the source.

Tagsbankingeconomytax

Author

Simon Jack

Intelligence analysis by

Qwen 2.5 (3B)

Published

Oct 15, 2026

Source

bbc.co.uk

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Topics

bankingeconomytax

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