Chancellor Healey may raise taxes on banks — The Guardian

In the United Kingdom, Chancellor John Healey may raise taxes on banks in his first budget, which is due to be presented on 28 October. As The Guardian reports, such a move is being considered to support the government’s plans to reduce the deficit amid rising government borrowing costs and the impact of the war in the Middle East on public finances.

Possible return of the rate to 8%

One option is to reverse the cut to the additional tax on bank profits previously introduced by Jeremy Hunt. Industry sources believe that the rate could be returned to 8% from the current 3%. According to calculations by the Trades Union Congress, this would bring the budget about £2.25 billion per year.

The four largest British lenders — HSBC, NatWest, Barclays and Lloyds Banking Group — have collectively made £200 billion in pre-tax profits over the past five years. Trade union representatives are calling on the government to increase taxation of the sector, pointing to banks’ high profits during a period of elevated interest rates.

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Banks oppose the increase

The heads of HSBC, Lloyds, NatWest, Barclays and Santander met with Healey last week but received no assurances that taxes would not be raised. Industry associations UK Finance and TheCityUK said in a letter to the chancellor that higher taxes could weaken investor confidence, reduce the United Kingdom’s attractiveness and force banks to move employees and business outside the country.

At the same time, Healey is listening to proposals from specialist banks, including Revolut and Shawbrook, to raise the profit threshold at which the additional tax is charged from £100 million to £500 million. A government source said that the authorities seek to maintain favourable conditions for new banks and lending to small businesses.

The budget is also expected to include a support package for households and businesses due to rising energy prices. Healey said that other government departments must adhere to the budget limits set out in the public spending review in June 2025.