Key facts
- Chancellor John Healey plans to increase bank taxes in the October 28 budget.
- The proposed tax hike could raise over £2 billion annually.
- The increase would likely reverse cuts made by Jeremy Hunt, raising the bank surcharge from 3% to 8%.
- Banks have generated £200bn in pre-tax profits over the past five years.
- The TUC has lobbied for a 16% surcharge, which could raise £24bn over four years.
UK Chancellor John Healey is reportedly set to increase taxes on banks in his upcoming budget on October 28 to help address the public finances. The move aims to offset increased government borrowing costs. One option under consideration is reversing cuts to the bank surcharge, which could generate over £2 billion annually. This would likely mean raising the surcharge from its current 3% to 8%. Banks have recently reported strong earnings, driven by rising interest rates. The TUC has advocated for a higher tax rate, arguing that banks are making substantial profits while households face financial hardship. However, banking industry groups have warned that higher taxes could deter investment and lead to staff and business relocation. Healey has acknowledged the importance of banks to economic growth but is believed to be leaning towards the tax increase.