Chancellor Rishi Sunak is reportedly planning to more than halve the tax surcharge on bank profits in next week’s Budget to help boost London’s competitiveness as a global financial centre.
Mr Sunak will announce a cut to the surcharge from 8% to 3% from April 2023 in his October 27 Budget, according to the Financial Times
It comes ahead of a hike in corporation tax from 19% to 25% in 2023, which Mr Sunak had cautioned risks making “the taxation of banks uncompetitive”.
Banks currently pay 27% tax on profits, of which 19% is corporation tax and 8% the bank surcharge.
They would see their overall corporation tax charge surge to 33% in 2023, if the surcharge was not reduced.
But the expected reduction in the top-up tax would instead see their overall charge edge up to 28%.
It follows comments by City minister John Glen last month flagging that the surcharge could be cut as he vowed that Britain’s financial services sector would enjoy “competitive tax rates”.
Mr Glen also said at the time he would keep under review the bankers’ bonus cap as the UK looks to bolster the competitiveness of the City in the wake of Brexit, which has seen jobs and bank offices shift to rivals such as Frankfurt, Paris and New York.
The bank tax was introduced by former chancellor George Osborne on profits over £25 million in 2015, taking effect in January 2016, as cuts were made to the bank levy – launched in the wake of the financial crisis.
The Treasury was not immediately available to comment.
