U.K. Government Temporarily Doubles Surcharge on Banks — Update

By Michael Hennessey

The U.K. government said it would temporarily double the bank corporate tax surcharge from January as it seeks to weather "global economic storms."

Treasury chief John Healey said in Wednesday's U.K. budget that the bank surcharge would increase to 6% from 3% from January for 15 months to pay for "immediate support on energy bills."

The measure, which will last to the end of March 2028, will raise 1.5 billion pounds ($2 billion), the Treasury said.

The bank surcharge was first introduced in 2016 following the global financial crisis, and originally stood at 8% on profit above 25 million pounds.

Analysts had expected an increase of 5 percentage points in the surcharge on bank profits to return the levy to its previous level of 8%. Shares in British banks rose in response, with Lloyds up 2.8%, NatWest 2.5% higher and Barclays gaining 2.2%.

"The windfall tax placed upon energy companies back in 2022 was similarly supposed to be time limited, yet it continues in operation today," said Quilter Cheviot's Will Howlett. "The banks will be very wary of this fact so this time limit should be taken with a pinch of salt."

In 2023, when the U.K.'s main corporation tax rate increased to 25% from 19%, the surcharge was cut to 3% by the Conservative government, with the threshold raised to 100 million pounds.

Healey also raised taxes on gambling by increasing the machine games duty--a tax on the net takings of some slot machines--to 25% from 20%.

Analysts had feared a larger increase in the tax, after 90 Labour members of parliament signed a letter urging Healey to increase taxes on the machines to 40%.

Shares in Ladbrokes owner Entain climbed 5.2% while Evoke--the owner of William Hill and 888--gained 3.8%.

Healey also confirmed a new equity loan scheme for first-time buyers, known as Your First Home, would be funded with 4.7 billion pounds of government-backed lending.

Write to Michael Hennessey at michael.hennessey@wsj.com

(END) Dow Jones Newswires

October 28, 2026 10:42 ET (14:42 GMT)