Bank taxes to rise by less than some feared to help fund ‘breathing space’

Bank taxes are set to rise by less than some in the industry had feared, as the Chancellor said he was asking “a bit more” from banks to help fund support on energy bills.

Banks will pay an extra 3% on the corporation tax surcharge, John Healey announced in his autumn Budget statement.

This will bring the surcharge from the current 3% level to 6%.

It is a smaller change than the hike to 8% that some reports had suggested he was considering – which would have reversed the tax cut brought in by the former Conservative government.

The measure will also be temporary rather than permanent, kicking in from January and ending 15 months later.

This helped deliver a boost to bank shares on Wednesday afternoon, with shares in Britain’s Lloyds Banking Group, NatWest Group and Barclays all up by around 3% following the statement.

Mr Healey said he was “asking a bit more of our banks to support ordinary people”.

He told the Commons: “As Chancellor, I want to say directly to our banks, I celebrate and am grateful for the role you play.

“Amid global economic storms, I am looking to our banks to help fund breathing space for British families.”

The surcharge is an extra tax on the profits that banks make. It sits on top of the standard rate of corporation tax which is 25%.

Bosses of the biggest groups representing financial services, including UK Finance and the CBI (Confederation of British Industry), have spoken out against hiking taxes in recent weeks, arguing it will damage the attractiveness of the UK as a place to grow and invest.

They say banks are more likely to move their offices outside of the UK and to other financial hubs where the tax burden is lower.

Tax paid by the banking sector increased by 8.5% to £39.1 billion in the 2025-26 tax year, compared with the previous year, HMRC figures show.

Receipts from the surcharge jumped by a fifth year-on-year, largely because profits across the industry have risen.

Published: 28/10/2026 by Radio NewsHub