Banks expect to be hit with higher taxes in Budget
Source: BBC Politics ↗ (cross-verified by 3 outlets — full list below)
Senior banking executives have warned that they expect to be “on the menu” in Chancellor Jeremy Healey’s upcoming Budget, signalling that the sector will likely face higher taxes in the fiscal statement due in two weeks. The four biggest UK banks collectively posted roughly £15 billion of profit in the first half of the year, prompting trade unions to call for additional levies. In reaction, shares of domestically focused banks such as Lloyds and NatWest slipped more than 2 % on Friday, while Barclays fell only slightly and HSBC actually rose, reflecting their larger international footprints that would cushion a UK‑only tax increase.
The most concrete avenue for extracting extra revenue is the reversal of the 2023 reduction in the bank surcharge on corporation tax, which was cut from 8 % to 3 % under former chancellor Jeremy Hunt. Restoring the surcharge to its previous level could raise about £2 billion, although the Treasury appears inclined to adjust the rate rather than re‑introduce a brand‑new windfall tax because it is administratively simpler. Other options include raising the bank levy on loans or imposing a moratorium on the practice that allows banks to offset current profits with historic losses—a measure that could generate an estimated extra £1 billion annually, particularly affecting Lloyds, which has benefited from loss carry‑forwards since the financial crisis.
Industry voices remain divided on the desirability of higher taxes. UK Finance cautioned that further increases would weaken competitiveness, deter investment and undermine job creation, while former banker Sir Philip Augar argued that a moderate rise could raise up to £3 billion a year without harming the sector, noting that banks are currently enjoying “booming conditions” from high interest rates. Trade Union Congress general secretary Paul Nowak highlighted the banks’ “bumper profits” and called for a fairer tax share, whereas foreign‑bank chief Jamie Dimon warned that additional sector‑specific taxes could make the UK one of the most heavily taxed banking jurisdictions worldwide, potentially discouraging investment. The outcome of the Budget will therefore shape the balance between revenue needs and the government’s ambition to sustain growth across every postcode.
⚡ Effects Interpreter
🌍World Economymedium impact
What this means for you
- ▶Markets typically read political news for clues about what comes next.
- ▶Policy signals like this often shape boardroom decisions for months.
🏙️Local Economylow impact
What this means for you
- ▶Prices at your local shops could feel a mild, indirect squeeze from this.
- ▶Everyday costs in your town might drift as the wider economy reacts.
🏦Rates & Bankslow impact
What this means for you
- ▶Currencies can react fast to political news — the pound or dollar may move.
- ▶Government bond yields typically move first when politics takes a turn.
❤️Healthlow impact
What this means for you
- ▶Talking things through with family or friends can ease the load.
- ▶Stress levels in affected communities may tick up before they settle.
💷Wealthmedium impact
What this means for you
- ▶Nest eggs can wobble briefly before finding their footing again.
- ▶Savings and portfolios can see short-lived ups and downs after a story like this.
🏠Housinglow impact
What this means for you
- ▶Anyone selling soon might want a fresh valuation once the dust settles.
- ▶The housing market has a habit of lagging behind the headlines.
🌍 Effects for your country
The U.S.'s central bank rate currently stands at 3.75%, so a global rates move like this could feed through to local borrowing costs. The U.S.'s economy is growing at 2.3% with inflation at 3.2%, the backdrop this story's effects play out against locally. Housing-market effects like this are usually felt most where mortgage rates track the U.S.'s own central bank rate closely. With the U.S.'s unemployment at 4.4%, personal-finance effects like this land on a labour market that is currently fairly stable. Health-system effects are harder to localise from economic indicators alone — the real impact in the U.S. depends more on local healthcare capacity than the figures above.
The UK's central bank rate currently stands at 3.75%, so a global rates move like this could feed through to local borrowing costs. The UK's economy is growing at 0.8% with inflation at 3.2%, the backdrop this story's effects play out against locally. Housing-market effects like this are usually felt most where mortgage rates track the UK's own central bank rate closely. With the UK's unemployment at 5.6%, personal-finance effects like this land on a labour market that is currently fairly stable. Health-system effects are harder to localise from economic indicators alone — the real impact in the UK depends more on local healthcare capacity than the figures above.
France's central bank rate currently stands at 2%, so a global rates move like this could feed through to local borrowing costs. France's economy is growing at 0.9% with inflation at 1.8%, the backdrop this story's effects play out against locally. Housing-market effects like this are usually felt most where mortgage rates track France's own central bank rate closely. With France's unemployment at 7.9%, personal-finance effects like this land on a labour market that is already under strain. Health-system effects are harder to localise from economic indicators alone — the real impact in France depends more on local healthcare capacity than the figures above.
Romania's central bank rate currently stands at 6.5%, so a global rates move like this could feed through to local borrowing costs. Romania's economy is growing at 0.7% with inflation at 7.8%, the backdrop this story's effects play out against locally. Housing-market effects like this are usually felt most where mortgage rates track Romania's own central bank rate closely. With Romania's unemployment at 6%, personal-finance effects like this land on a labour market that is currently fairly stable. Health-system effects are harder to localise from economic indicators alone — the real impact in Romania depends more on local healthcare capacity than the figures above.
The UAE's central bank rate currently stands at 3.65%, so a global rates move like this could feed through to local borrowing costs. The UAE's economy is growing at 3.1% with inflation at 2.5%, the backdrop this story's effects play out against locally. Housing-market effects like this are usually felt most where mortgage rates track the UAE's own central bank rate closely. Health-system effects are harder to localise from economic indicators alone — the real impact in the UAE depends more on local healthcare capacity than the figures above.