Banks say Healey is planning Budget tax raid on their profits

Senior banking figures across the financial sector report that they anticipate targeted tax measures when the chancellor addresses Parliament later this month. According to reporting by the BBC, senior banking executives have stated that their sector is expected to be on the agenda when the upcoming fiscal plans are unveiled. The four largest domestic banking institutions generated combined profits reaching approximately £15bn during the opening six months of the year. While John Healey has characterized these institutions as part of the country's economic foundation, he has consistently declined to rule out potential revenue-raising measures directed at the industry.

The mounting expectation of a fiscal squeeze comes as the government faces mounting pressure to keep national borrowing under control amid soaring borrowing costs. As detailed by The Irish News, trade unions have publicly demanded heavier levies on what they describe as bumper financial returns. Trades Union Congress general secretary Paul Nowak argued that major institutions are pulling in substantial weekly sums while employee bonuses reach record highs following past financial crashes. The union calculation suggests that reversing previous adjustments to the profit surcharge could yield billions annually for public coffers.

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John Healey urged to hike taxes on banks’ ‘bumper profits’ in Budget

The financial sector currently contributes substantial sums to the public purse, with total contributions reaching nearly £40bn last year when employee income tax is included. Major institutions and building societies are subject to a corporate tax rate alongside a specific 3% surcharge and a balance sheet asset levy. The asset levy brought in £1.4bn during the previous year, while the surcharge generated an additional £1.2bn. Trade bodies such as UK Finance have cautioned that introducing further burdens would undermine competitiveness, discourage investment, and work against broader regional growth ambitions.

Various policy levers remain available to the Treasury for extracting additional revenue from financial institutions. One prominent proposal involves returning the profit surcharge to the higher level seen under former leadership before it was reduced alongside corporation tax adjustments. Another option discussed with Treasury officials involves restricting the ability of lenders to offset historical losses against current earnings. Lenders such as Lloyds have historically benefited from utilizing financial crisis-era losses to lower their tax liabilities, and suspending this practice could provide a substantial windfall for the Treasury.

Industry stakeholders have highlighted divergent concerns regarding how these potential changes might be structured. Some executives note that targeting historical loss offsets rather than headline surcharges might spare foreign operations operating within the UK, such as JPMorgan. However, domestic trade representatives argue that any policy exempting foreign competitors while penalising domestic institutions would contradict broader government commitments to back British commerce. Prominent international banking figures have previously warned that the jurisdiction already maintains one of the heaviest financial tax burdens globally.

Opposition figures and business groups have strongly resisted the prospect of additional sector-specific taxation. Conservative shadow chancellor Andrew Griffith argued that economic expansion requires supporting wealth creators rather than increasing their operational burdens. Similarly, Louise Hellem, chief economist at the Confederation of British Industry, emphasized that financial services remain vital for driving capital markets and innovation, urging policymakers to avoid measures that discourage domestic investment. Meanwhile, a Treasury spokesperson maintained the government's standard position that tax decisions remain a matter for the chancellor to set out formally.

The chancellor has cautioned the public to prepare for a difficult fiscal announcement on October 28, noting that global economic conflicts and inflation pressures continue to strain public finances.