Healey declines to rule out UK bank tax ahead of Oct 28 budget
The mechanism under discussion is an increase to the existing bank levy on top of corporation tax, according to Reuters.
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Chancellor Rachel Healey declined on Thursday to rule out a windfall tax on bank profits, telling reporters in Bangkok that banks are "hardwired into the economic fabric of this country" while giving no steer on what the budget will contain, Reuters reported.
The option being discussed is raising the existing bank levy on top of standard corporation tax, a move Reuters reported could raise billions of pounds given how much lenders have earned from higher interest rates. Just over a week earlier, Healey told bank chief executives including HSBC's Georges Elhedery, Barclays' CS Venkatakrishnan, Lloyds' Charlie Nunn and NatWest's Paul Thwaite that no decision had yet been made, Bloomberg reported.
British banks say they already pay more tax than lenders in some other major economies, and some analysts have warned that higher levies could push banks to raise charges for customers, according to Reuters. The Chancellor's room to maneuver has narrowed further: his fiscal headroom has roughly halved since the Iran war, according to Dara Insights.
A bank-specific levy would mark a concrete shift from the vaguer language of fiscal discipline Healey has used in recent weeks, giving markets an actual revenue mechanism to price rather than general reassurance about the sector's resilience. For UK banks, it would mean a direct hit to earnings through higher tax charges, a more immediate concern than the broader gilt-market narrative tied to Bank of England policy. With the budget two weeks away, the comments look like a test of market reaction to a sector-targeted tax before the rate and scope are set, a signal that could shape how sharply bank shares move once the details are confirmed.