Tax cuts for large banks have deprived the UK government of £6bn in revenues, according to campaigners. The Trades Union Congress (TUC), representing over 5.3 million members, states that the public purse is worse off due to tax cuts introduced in 2023 under then-Tory Chancellor Rishi Sunak.
The government at the time reduced the bank surcharge, an additional levy on lenders' profits, from 8% to 3%. This move was intended to counteract an increase in corporation tax from 19% to 25%, following arguments from the industry that higher taxes would disadvantage them compared to other financial centres.
The TUC's analysis of HMRC corporate tax receipts indicates a loss of £2.3bn in 2023-24, £1.7bn in 2024-25, and £2bn in 2025-26, totalling £6bn over three years. Paul Nowak, the TUC's general secretary, stated that the "Tories’ tax break for banks has cost the UK public purse £6bn and counting."
With banks reporting significant earnings, the TUC suggests the surcharge should be increased beyond its pre-2023 level in the 28 October budget. They estimate that raising the surcharge to 16% could generate £24bn over the next four years, while a 35% surcharge could deliver £60bn over the same period.
Chancellor John Healey is being urged by campaigners to increase taxes on banks in the upcoming budget. However, banking lobby group UK Finance, through its chief executive David Postings, has argued that further tax increases would weaken the UK's competitiveness and discourage investment.