The Trades Union Congress’s proposal to restore Britain’s bank surcharge to 8% raises a revenue question for Prime Minister Andy Burnham’s first Budget, due Wednesday, Oct. 28, after receipts reached £1.2 billion in 2025-26.
HM Revenue & Customs (HMRC) says the surcharge is 3% on a banking group’s chargeable profits above an annual £100 million allowance. The rate was 8% on profits above £25 million through 2022-23, and the surcharge is paid alongside Corporation Tax.
Surcharge receipts rose 20.1% from the previous financial year, HMRC reported. Banking-sector Corporation Tax receipts were £9.7 billion, while the separate Bank Levy brought in £1.4 billion. The levy is based on chargeable equity and liabilities on banks’ balance sheets.
The Trades Union Congress (TUC) estimates that restoring the surcharge to 8% would raise £9 billion over four years. The union body proposes using the revenue for an energy-bill social tariff; the estimate is not a government forecast. Guardian columnist Polly Toynbee also called for higher bank taxes in a Tuesday column, citing the public cost of the 2007-09 bank rescues.
UK Finance has warned that higher taxes could affect investment and jobs. A report prepared for the trade group by PwC put the total tax rate for a model bank in London at 46.2% in 2026, compared with 42.2% in Amsterdam and 27.9% in New York. Those figures come from a model and are not measured rates for every bank. UK Finance chief executive David Postings said, “A strong economy needs strong banks.”
The House of Commons Library said the 2007-09 interventions totaled £137 billion in loans and capital, with most later repaid; it cited an OBR estimate of a £23 billion net public cost at the end of January 2018.
The surcharge’s reduction took effect alongside an increase in the main Corporation Tax rate to 25%. HMRC said in a 2021 policy note that the changes were intended to produce a combined 28% tax rate on bank profits while balancing banks’ tax contribution with Britain’s competitiveness for international business.
No official announcement has confirmed a change to the surcharge for the Budget. Reuters reported that, when asked about bank taxes in Bangkok on Oct. 15, Chancellor John Healey said, “That said, I've got decisions to take in the budget and I will.”
The debate follows earlier EconoTimes coverage of a possible bank-tax increase in the October Budget. Healey is scheduled to present the Budget on Wednesday, Oct. 28.
