Andy Burnham and John Healey plot huge tax hike - how it could hit you

Andy Burnham and John Healey plot huge tax hike - how it could hit you The City is warning that banks could try to recoup tax losses from customers. Share Article Share Article Facebook X LinkedIn Reddit Bluesky Email Copy Link Link copied Bookmark Add us as preferred source Comments By Jon King , News Reporter 19:05, Sun, Oct 18, 2026 Updated: 19:13, Sun, Oct 18, 2026 Chancellor John Healey is reportedly mulling an increase on taxing bank profits (Image: Getty) John Healey is said to be considering an increase in taxing bank profits at the Budget in an effort to get a grip on the Government’s spending challenges. The Chancellor may hike the surcharge on lenders' profits above £100million from 3% to 8%, reversing a cut introduced in April 2023 when Jeremy Hunt was Chancellor. Major banks already pay a surcharge on their profits over and above the Corporation Tax they already pay. While upping the surcharge could raise some £2billion for the exchequer, banks warn it could inflict a £20 billion hit to the economy . When the surcharge was cut from 8% to 3% in 2023, Corporation Tax rose from 19% to 25%, increasing the combined rate on bank profits from 27% to 28%. Article continues below ADVERTISEMENT The Conservatives and City groups have warned that targeting banks would stifle investment and damage Britain’s competitiveness as a financial centre. Damian Pudner, director of the Great British Think Tank, said higher taxes will influence how much banks invest and lend in the UK. He said: "Borrowers, businesses and consumers will end up paying for this one way or another, whether through more expensive credit, reduced lending or weaker investment. The notion that the Government can extract billions more from banks without consequences for the wider economy is economically illiterate." Get personal finance news, money saving tips and advice plus selcted offers and competitions I would like to receive emails from the Daily Express featuring our latest products, services, offers, and promotions from across the Reach Plc family . Subscribe Invalid email You agree you are 18 or over. We use your sign-up to provide content in ways you've consented to and to improve our understanding of you. This may include adverts from us and third parties based on our knowledge of you. You can unsubscribe at any time. More Info . Tax-free Personal Allowance will rise to £20,070 due to HMRC rule HMRC confirms £33 automatic tax charges for state pensioners every month Tory shadow chancellor Andrew Griffith said: "Britain needs growth. But a raid on the financial services sector will stifle it. Labour should be backing businesses and wealth-creators, not making their lives even harder." Article continues below ADVERTISEMENT Trades Union Congress (TUC) General Secretary Paul Nowak backed the move, which his union calculated would raise £2.25billion per year. He said: "Britain’s big four banks are making a billion pounds a week, while bonuses have hit a post-crash record. Article continues below ADVERTISEMENT "These are bumper profits – driven by high interest rates and households’ mortgage misery... It’s time to make sure banks pay their fair share." A Treasury spokesperson said: "As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals." Louise Hellem, chief economist at the Confederation of British Industry, said the Budget should avoid measures that would undermine competitiveness or weaken incentives to invest. How might the proposal affect you? The City has warned that a tax raid on bank profits would push up mortgage rates and make the cost-of-living crisis even worse. Should banks be forced to pay more in tax, which could affect their profits, it could lead lenders to try and recoup losses. This could involve passing on the costs to customers, some of whom will already be grappling with the cost-of-living. Analysts at the Swiss multinational bank UBS have warned that banks would pass on the cost of increased taxes in higher mortgage rates and lower savings rates. However, doing so would risk losing customers to other lenders with better deals and offers. If Mr Healey takes the idea forward, only the biggest banks would be affected, leaving customers with the option to switch to smaller rivals offering competitive rates. UBS analyst Jason Napier warned that a tax raid would discourage investment and generate less revenue than needed to "move the needle" on UK public debt and spending, according to the Telegraph . Trade association UK Finance said a strong banking sector is essential to a strong UK economy. A spokesperson warned that an increase in bank taxes in the Budget would weaken the UK’s competitiveness, discourage investment and job creation. Budget 2026 John Healey Andy Burnham Taxes Savings Mortgage Cost of living Share Article Share Article Facebook X LinkedIn Reddit Bluesky Email Copy Link Link copied Bookmark Add us as preferred source Comments