UK financial groups urge Healey not to raise bank taxes

Leaders of major financial and business groups have urged John Healey not to increase bank taxes in the forthcoming Budget. They warned of risks to investment and Britain's competitiveness.

The appeal involves UK Finance, TheCityUK, the CBI, City of London Corporation and the Association for Financial Markets in Europe. Signatories include David Postings, Miles Celic, Rain Newton-Smith, Chris Hayward and Adam Farkas.

The authors argue that tax decisions should be assessed beyond their expected short-term revenue. In their view, the government also needs to consider effects on investment and financial firms' ability to serve households and businesses. Higher burdens, they say, could weaken the UK's attractiveness.

UK banks already pay a sector-specific 3% surcharge on corporate profits, as well as the bank levy. Public debate has included restoring the surcharge to 8%. Discussion of that proposal does not mean the government has decided to implement an increase. The surcharge was reduced from 8% to 3% in 2023.

The signatories warn that higher rates may not produce higher revenues if capital, staff and businesses relocate overseas. They also link tax increases to a possible reduction in the availability of financing for households and companies. Those are the industry's assessments, rather than established outcomes of a future policy change.

The financial groups want predictable conditions comparable with commitments offered to other sectors through the Corporate Tax Roadmap. They are seeking a commitment not to increase the bank levy or surcharge and not to introduce additional bank taxes.

Healey met executives of major banks this week. The letter adds pressure ahead of the Budget as market participants debate possible sources of additional revenue. Its warning concerns proposed measures and their potential consequences, rather than an announcement of final government tax policy.