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2h ago

Treasury Weighs Pre‑Budget Rise to Bank Surcharge That Could Hit Savers

Ministers see targeting bank profits as a faster way to plug a Budget gap than raising income tax or VAT.

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If the tax on banks' profits is increased in the Budget, they may transfer some of the cost on to their customers (Photo: Gareth Fuller/PA)
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Overview

  • Officials are considering lifting the banking surcharge from 3% toward 8%, with union estimates suggesting about £2bn a year in extra revenue if fully restored.
  • Sources say the option remains under active consideration ahead of the Autumn Budget announcement next week, and no decision has been confirmed.
  • Market speculation about a higher levy has already pressured UK bank shares in recent weeks.
  • Economists warn lenders could protect margins by lowering savings rates, raising some borrowing costs, or tightening credit, although mortgage competition may limit increases.
  • Context for the move includes strong sector earnings, with the five biggest UK banks forecast to make roughly £52.6bn in pre‑tax profits next year, and the surcharge having been cut from 8% to 3% in 2023.