Banks expect to be hit in Budget tax raid
Summary
UK banking leaders expect the government to increase taxes on their sector in the upcoming Budget. The banks have made large profits recently, and the government is considering raising their tax rates or changing rules to collect more money.Key Facts
- The UK’s biggest banks made about £15 billion profit in the first half of 2024.
- Banks currently pay a 3% tax surcharge on top of the 25% corporation tax plus a levy on some assets.
- The banking sector contributed nearly £40 billion to the UK Treasury last year, including employee income taxes.
- The 3% surcharge was cut from 8% under former Chancellor Rishi Sunak when corporation tax rose to 25%.
- Returning the surcharge to 8% could raise around £2 billion more tax per year.
- The bank levy is charged at 0.1% or 0.05% on certain loans, excluding mortgages.
- Banks can currently use past losses to reduce their tax bills; suspending this rule could bring an extra £1 billion yearly.
- Foreign banks warn that more bank-specific taxes may reduce investment and weaken UK competitiveness.
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