16th Oct 2026 08:03
(Alliance News) - UK Chancellor John Healey is poised to tax Britain's banks more heavily in his October 28 budget, to help offset the damage inflicted on the public finances by war in the Middle East, the Guardian reported late Thursday.
To keep the Treasury's deficit reduction plans on track in the face of rising UK government borrowing costs, the Guardian said it understands Healey has decided to tap the financial sector for additional revenue.
One option understood to be under discussion – reversing cuts to the bank surcharge made by former chancellor Jeremy Hunt – would raise upwards of GBP2 billion a year, the newspaper said.
The UK's biggest banks and building societies currently pay a surcharge of 3% on top of the baseline 25% rate of corporation tax, plus a levy on the assets held on their balance sheets. The 3% surcharge was reduced from 8% under the former chancellor, at the same time as he raised corporation tax from 19% to 25%.
Lenders have been logging strong earnings on the back of rising interest rates, with the UK's four largest lenders – HSBC Holdings PLC, NatWest Group PLC, Barclays PLC and Lloyds Banking Group PLC - alone having generated GBP200 billion in pretax profit over the past five years, the Guardian noted.
On Tuesday, Healey, who is at the International Monetary Fund's annual meeting in Bangkok called the banks part of "the crown jewels" of the UK economy, but did not rule out a tax hit.
He met with bank chiefs earlier this month but no decision on tax was made. But senior banking executives have told the BBC they expect the sector to be "on the menu" when the budget is unveiled in two weeks time.
By Jeremy Cutler, Alliance News reporter
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