The Trades Union Congress (TUC) has renewed its calls for an increase in the bank surcharge tax. This comes as the four major banks report billions in profit.
According to the latest data, the big four banks – Barclays, HSBC, Lloyds and Natwest – have made £13.8bn in the first quarter of 2026 alone. This is despite HSBC profits taking an unexpected hit because of fraud-related charges.
And it comes hot on the heels of the big four banks making profits of £45.7bn in 2025.
The TUC says that an increase in the bank surcharge could raise significant funds over the coming years – particularly given the scale of banks’ current windfalls.
The union body also warns that if – as inflation goes up – the Bank of England holds interest rates at a higher level than previously expected, banks will be set to make even more money.
HSBC reflected this when reporting its profits on 5 May. The bank explicitly said it is expecting to benefit from higher interest rates this year.
The union body says that “now it’s more vital than ever” that banks play their part in any efforts to protect the economy after Donald Trump’s illegal war has unleashed economic chaos.
Time for action on the banks
Currently the bank surcharge is an additional 3% corporation tax on the profits of banking companies above £100m. The Conservatives reduced this from 8% in April 2023.
The removal of the bank surcharge turbocharged bank profits just as high interest rates meant excess profits for banks.
This has led to higher returns both from net interest (the difference on interest charged to borrowers and paid to savers) and interest paid to banks on reserves they hold at the Bank of England.
As a result, bank profits are now much higher than they were in the period before the financial crisis. But after the pandemic, the Conservatives slashed taxes on banks.
TUC analysis reveals an increase in the bank surcharge could raise from £9bn to £60bn over the next four years:
- Even just reversing the Tory cuts and setting it at 8% – which the TUC says is the “bare minimum” – would raise £9bn over four years.
- A 16% surcharge, which is doubling what it originally was before the Conservatives cut it, would deliver £24bn over four years.
- A 35% surcharge, which would be the same level as the windfall tax the Conservatives imposed on energy companies, would deliver £60bn over four years.
Recent TUC polling shows significant support for a windfall tax on banks, with two in three (66%) backing this approach. This rises to 83% among Conservative to Labour switchers in the 2024 general election and 73% among Labour voters from the 2024 election now leaning to Reform.
TUC general secretary Paul Nowak said:
Getting banks to pay more tax on their profits is plain common sense when they’re raking in billions and the rest of the country is struggling to get by.
After the Tories cut the bank surcharge tax, banks enjoyed a profits bonanza because of high interest rates.
Now they could be set to make even more if interest rates remain high for longer.
With Donald Trump’s illegal war abroad unleashing economic chaos at home, it’s only right that banks’ bumper profits are taxed fairly and used to shield households and firms from the damaging impacts of the war.
The last economic shock caused by Putin’s illegal invasion in Ukraine led to a bumper pay day for banks at the expense of mortgage payers – we can’t allow the same thing to happen again.
Featured image via the Canary
By The Canary
From Canary via This RSS Feed.