Banks say Healey is planning to increase tax on their profits in Budget
Senior banking executives have told the BBC they expect to be "on the menu" in the chancellor's Budget tax later this month.
By BBC News
Senior banking executives expect the sector to face higher taxes when Chancellor John Healey delivers the Budget later this month.
The executives told the BBC that banks would be “on the menu” as the Government looks for additional revenue.
The UK’s four largest banks made a combined profit of about £15bn in the first six months of this year. The figures cover HSBC, NatWest, Barclays and Lloyds Banking Group.
Banks and building societies currently pay a 3% surcharge on profits, in addition to the standard 25% corporation tax rate. They also pay a levy based on the assets held on their balance sheets.
One option reportedly under consideration is reversing the reduction in the bank surcharge introduced by former chancellor Jeremy Hunt. The surcharge had previously stood at 8%.
The Trades Union Congress has called for banks to pay more tax, arguing that their profits justify an increase. It has proposed raising the surcharge to 16%, which it says could raise £24bn over four years.
The Institute for Public Policy Research has separately suggested a temporary tax on commercial banks’ windfall profits. It estimates that this could raise an extra £1bn a year.
Healey has described banks as among the “crown jewels” of the UK economy. Speaking ahead of the Budget, he said the sector was central to the country’s economic future while keeping his options on tax changes open.
No final decision on the level of bank taxation has been announced.
The Budget is due to take place on 28 October.