28 October 2026
If you are covering news of the doubling of the Bank Corporate Tax Surcharge from 3% to 6%, please find below a comment from Will Howlett, financials analyst at Quilter Cheviot:
“The UK’s banks had feared a five-percentage point surcharge to the bank levy heading into this budget, so will be breathing a sigh of relief it is only three percentage points – taking the overall levy to 6%. The Chancellor was keen to stress how grateful he was of the industry and that it should be celebrated, so some may see this as a bit of a kick in the teeth.
“The good news for these businesses is that the surcharge is time limited to 15 months. This gives some certainty to the banks, but they will be more than aware that should the economic environment not be particularly helpful, this will get extended. The windfall tax placed upon energy companies back in 2022 was similarly supposed to be time limited, yet it continues in operation today. The banks will be very wary of this fact so this time limit should be taken with a pinch of salt. The geopolitical situation shows no sign of abating and given much of this windfall is going to help lower income households, there will need to be a material change to the conflict in the Middle East for the better in order for the government to feel they can return to the previous levels.
“Either way, this is a better outcome than feared for the banks, and share prices are up as a result. This will hit earnings, but at a time of higher interest rates and strong margins, this will likely be absorbed. The domestic banks will be most exposed to this additional levy, and as such those with strong overseas operations, such as HSBC, Standard Chartered and Barclays, will be in a better position to navigate this new tax regime."
