Chancellor John Healey is reportedly planning to increase taxes on British banks in the forthcoming budget. This move comes after the campaign group Positive Money reported this summer that the UK's four largest banks generated £29 billion in profits during the first half of this year, marking a fifth increase compared to 2025.
These reported windfalls are attributed more to higher interest rates than to improved products or services. Households and businesses are paying more to borrow, while the Bank of England pays banks tens of billions in interest on their reserves, with the Treasury covering the cost.
The Chancellor is said to favour restoring the bank surcharge from 3% to 8%, which could generate approximately £2 billion per year. Banks have argued they already face higher taxes than other companies, that their lending capacity would be affected, and that their profits may not be sustained. However, the Bank of England stated that banks spent £7.7 billion on dividends and share buybacks in the first quarter of 2026 without impacting lending.