UK Chancellor John Healey announces 3-point bank surcharge rise
Healey announced a 15-month increase from January 2027 to help fund energy-bill support; the higher rate is not yet in force.
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Healey announced a 15-month increase from January 2027 to help fund energy-bill support; the higher rate is not yet in force.
UK Chancellor John Healey announced a three-percentage-point increase in the bank surcharge, from 3% to 6%, in his 28 October Budget. The Office for Budget Responsibility (OBR), which produces UK budget forecasts, estimates that the temporary increase will raise £1.5 billion.
The OBR’s estimate, detailed by the Guardian, is a forecast of future tax receipts, not money already collected. The £1.5 billion total already allows for an estimated £190 million reduction because some banks are assumed to move profits out of the UK in response to the higher rate.
The OBR said the size of that effect is uncertain. The £190 million adjustment therefore reflects an assumption about how banks will respond, rather than a measured loss of tax revenue.
| Period | Forecast receipts |
|---|---|
| January–March 2027 | £305 million |
| 2027–28 financial year | £950 million |
| 2028–29 financial year | £220 million |
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The surcharge is an additional tax on banks’ profits, charged on top of corporation tax. The announced change would double the surcharge rate, not banks’ entire tax bill. The current surcharge remains 3% until the scheduled increase takes effect.
Healey said the temporary increase would help fund immediate support with families’ energy bills. He also announced a £100 winter energy payment for households in England in council tax bands A to D, categories used to set local property-tax bills. He said the payment would reach 20 million households.
The surcharge stood at 8% before former chancellor Jeremy Hunt lowered it in 2023, so the announced 6% rate would not fully reverse that cut. Before Healey spoke, reports had suggested a temporary increase below 8%; the Budget specified its rate and duration.
Bank shares rose after the announcement. The Guardian linked the gains to the increase being smaller than expected. The figures below were moves during trading on 28 October, not closing prices.
| Bank | Rise during trading |
|---|---|
| NatWest | Almost 4% |
| Lloyds | 3.75% |
Before the Budget, the Trades Union Congress (TUC) had advocated a surcharge of 16% or even 35%; neither was the rate announced. The TUC welcomed the increase to 6% and urged Healey to be ready to extend it and raise it if bank profits remained high. Opposition politician Kemi Badenoch said she would not support the increase.
The announced timetable schedules the higher surcharge for 15 months, from 1 January 2027 to 31 March 2028.
The Budget preserves the £20,000 annual cash ISA allowance and proposes a 24% rate on savings and rental income for basic-rate taxpayers from April 2027.
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