Union body says 2023 bank tax cut has cost UK public finances £6bn
The Trades Union Congress (TUC) calculates that the 2023 cut to the UK bank surcharge has cost the exchequer £6bn over three years. It is urging chancellor John Healey to raise the levy in the 28 October budget.
The Trades Union Congress (TUC), which represents unions with more than 5.3 million members in England and Wales, has calculated that a 2023 cut to the bank surcharge has cost the UK exchequer £6bn. It is calling on chancellor John Healey to raise taxes on banks in the 28 October budget so that lenders pay their "fair share".
What changed in 2023
The then Conservative government, with Rishi Sunak as chancellor, reduced the bank surcharge – an extra levy on lenders' profits – from 8% to 3%. The move was meant to offset a rise in corporation tax from 19% to 25%, after the industry argued that higher taxes would leave it at a disadvantage against financial centres such as New York.
However, bank earnings soon climbed as interest rates rose. The UK's four largest lenders – HSBC, NatWest, Barclays and Lloyds Banking Group – have made £200bn in pre-tax profits over the past five years.
TUC figures and proposals
The TUC's analysis of corporate tax receipts from HMRC, the tax authority, shows the public purse lost £2.3bn in 2023-24, £1.7bn in 2024-25 and £2bn in 2025-26.
It proposes raising the surcharge beyond its pre-2023 level. A rate of 16% could bring in £24bn over four years, while 35% – matching the windfall tax the Conservatives imposed on energy companies – would raise £60bn. Even restoring 8% would yield £9bn. The money could help cover household bills as part of prime minister Andy Burnham's push to tackle the cost of living.
TUC general secretary Paul Nowak pointed to the record £25bn bonus pool banks paid out last year.
Industry response
Bank executives have lobbied hard against tax rises. Jamie Dimon, chief executive of US bank JP Morgan, warned Burnham and Healey last month that further levies could put investment and jobs at risk. Earlier this year he said he could scrap plans for a new £3bn London headquarters if the government turned hostile to banks.
David Postings, chief executive of lobby group UK Finance, said banks already face a materially higher total tax rate than in other leading financial centres and that further increases would weaken competitiveness. Campaign group Positive Money backs higher bank taxes. The Treasury was approached for comment.
