Treasury vs banks in windfall tax showdown

Treasury vs banks in windfall tax showdown as industry bosses push against higher taxes on the sector

Showdown: Chancellor Jeremy Hunt

A showdown between the Government and banks is on the cards as industry bosses push against higher taxes on the sector. 

As Rishi Sunak and Jeremy Hunt look to plug a hole in the country’s finances, banks have emerged as a possible target. 

The Prime Minister and Chancellor are looking at keeping the 8 per cent bank surcharge, even after corporation tax rises from 19 per cent to 25 per cent next April. This would push taxes on bank profits to 33 per cent. 

When Sunak was Chancellor, he promised to cut the surcharge to 3 per cent so when corporation tax rose to 25 per cent, banks would pay 28 per cent. 

Another option would be to tax profits lenders make on money stored with the Bank of England. 

But NatWest boss Alison Rose said: ‘Banks based in the UK already pay a considerable amount of tax, more than any other sector and more than any of our peers in other locations around the world.’ 

She added that ‘consistency and certainty’ in tax and regulation was needed but she conceded a windfall tax was ‘ultimately a decision for the Government’. Earlier this week HSBC chief executive Noel Quinn rejected suggestions banks should temporarily pay more tax to help fill the hole in UK finances. 

‘I would hope there isn’t a windfall tax, but that’s a matter for the Chancellor to decide,’ he said. 

Barclays boss CS Venkatakrishnan has warned higher levies on banks could hammer competitiveness. 

He said a ‘predictable tax regime’ was key to London’s success as a global financial centre.