Tory tax break for UK banks cost public purse £6bn, says TUC

Union body calls on chancellor to raise bank surcharge in October budget, warning lenders' record profits can afford higher taxes

By LineZotpaper

Published10 October 2026

Read Time2 min

Tax cuts for Britain's biggest banks have deprived the government of £6bn in revenue since 2023, according to analysis by the Trades Union Congress, which is urging Chancellor John Healey to increase the bank surcharge in the forthcoming budget and force lenders to pay their 'fair share'.

The TUC, representing unions with more than 5.3 million members across England and Wales, calculates that cuts introduced under then-chancellor Rishi Sunak in 2023 have cost the UK public purse billions. The then government slashed the bank surcharge from 8% to 3% to offset a rise in corporation tax from 19% to 25%, after the industry argued higher taxes would put them at a competitive disadvantage against financial centres such as New York.

However, the cuts coincided with rising interest rates that boosted lenders' earnings. The UK's four largest lenders — HSBC, NatWest, Barclays and Lloyds Banking Group — have generated £200bn in pre-tax profits over the past five years. The TUC's analysis of HMRC corporate tax receipts shows lost revenue of £2.3bn in 2023-24, £1.7bn in 2024-25 and £2bn in 2025-26, totalling £6bn over three years.

"The Tories' tax break for banks has cost the UK public purse £6bn and counting. It's time to end it and to make sure banks pay their fair share," said TUC general secretary Paul Nowak. "At a time when families are struggling with soaring energy costs, taxing banks' booming profits to cut bills is just plain common sense." The TUC says raising the surcharge to 16% could raise up to £60bn, which could be used to help cover rising household bills.

Bank bosses have been lobbying intensively against tax rises. Jamie Dimon, chief executive of JPMorgan, warned Burnham and Healey against further levies during a meeting last month, saying it could put investment and jobs at risk. Earlier this year Dimon warned he could scrap plans for a new £3bn London headquarters if the UK government became hostile to banks.

Analysis

Why This Matters

The £6bn figure represents a direct loss to public finances at a time when the government is seeking to address cost-of-living pressures and energy bills.
The upcoming budget on 28 October will be a test of the government's willingness to impose higher taxes on a sector that has enjoyed record profits.
The outcome could affect UK banking competitiveness and London's status as a financial hub, with potential job and investment implications.

Background

The bank surcharge is an additional levy on lenders' profits, introduced after the 2008 financial crisis. In 2023, the Conservative government cut it from 8% to 3% to offset a corporation tax rise, a move the industry argued was needed to keep London competitive. Since then, rising interest rates have dramatically increased banks' profitability, prompting unions and campaigners to argue the tax break was a giveaway that the sector no longer needs.

Key Perspectives

TUC and unions: Argue that banks can afford higher taxes given record profits and a £25bn bonus pool, and that the money should be used to ease household bills. Banks and industry lobbyists: Contend that higher taxes would make the UK less attractive for global banks, risk investment and jobs, and could lead to relocations. Critics/Skeptics: Some question whether raising the surcharge to 16% would raise the full £60bn claimed, or whether banks would respond by shifting profits or reducing UK activity.

What to Watch

The 28 October budget announcement for any changes to the bank surcharge rate.
JPMorgan's decision on its planned £3bn London headquarters.
Corporate tax receipts in next fiscal year as a measure of potential tax avoidance or profit shifting.

Sources

Tory tax break for banks has cost UK public purse £6bn, says TUC — UK news | The Guardian