The Chancellor has confirmed that banks will pay an extra 3% on the corporation tax surcharge, a smaller increase than some in the industry had feared, as part of efforts to fund support on energy bills.
John Healey announced the measure in his autumn Budget statement, bringing the surcharge from its current 3% level to 6%. The change is temporary rather than permanent, taking effect from January and ending 15 months later.
Smaller rise than expected
The increase is less than the hike to 8% that some reports had suggested he was considering, which would have reversed the tax cut introduced by the former Conservative government. The announcement delivered a boost to bank shares on Wednesday afternoon, with shares in Lloyds Banking Group, NatWest Group and Barclays all up by around 3% following the statement.
Mr Healey said he was "asking a bit more of our banks to support ordinary people". He told the Commons: "As Chancellor, I want to say directly to our banks, I celebrate and am grateful for the role you play. Amid global economic storms, I am looking to our banks to help fund breathing space for British families."
Impact on the sector
The surcharge is an extra tax on the profits that banks make, sitting on top of the standard rate of corporation tax, which is 25%. Bosses of the biggest groups representing financial services, including UK Finance and the CBI (Confederation of British Industry), have spoken out against hiking taxes in recent weeks, arguing it will damage the attractiveness of the UK as a place to grow and invest.
They say banks are more likely to move their offices outside of the UK and to other financial hubs where the tax burden is lower. Tax paid by the banking sector increased by 8.5% to £39.1 billion in the 2025-26 tax year, compared with the previous year, HMRC figures show. Receipts from the surcharge jumped by a fifth year-on-year, largely because profits across the industry have risen.
