UK Bank Profits Fuel Renewed Call for Windfall Tax

The four largest UK lenders—HSBC, NatWest, Barclays and Lloyds—have posted £29.2 billion in half-year profit, with £13.7 billion earmarked for dividends and share buybacks. Campaigners argue that a windfall tax on these earnings could raise about £19 billion, which they say would help fund Prime Minister Andy Burnham’s cost-of-living agenda. The TUC’s general secretary, Paul Nowak, urged the government to increase the tax on bank profits to protect households amid rising energy prices.

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The bank levy introduced by Chancellor George Osborne in 2010 taxed a portion of banks’ balance sheets following the 2008 crisis. By 2015, HSBC’s chief executive Stuart Gulliver warned that the £700 million annual levy could prompt a move of the bank’s headquarters to Hong Kong, prompting Osborne to scale back the levy to a 0.10 % rate on UK-based assets. A later chancellor, Rishi Sunak, reduced the profit charge from 8 % to 3 % in 2023, citing competitiveness concerns after Brexit.

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Prime Minister Burnham has not commented directly on a bank tax, but in June he said the government would seek to give “Britain some breathing space” as living costs rise. Treasury officials are reportedly reviewing the profitability of the big four banks in light of quantitative easing and the post-Covid cost-of-living crisis.

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Barclays’ chief financial officer Anna Cross emphasized that strong banks are essential for strong economies, arguing that the sector’s lending supports growth and consumer finance. Lloyds chief executive Charlie Nunn warned that higher taxes could “erode investment” and hinder economic recovery. NatWest chief executive Paul Thwaite echoed concerns that tax rises would curb lending.

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• Half-year profit: £29.2 billion (four largest banks)

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• Dividends and buybacks: £13.7 billion

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• Potential windfall tax revenue: £19 billion (campaign estimate)

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• Total effective tax rate on UK banks (including employment taxes and VAT): ~46.4 % versus 38.9 % in Frankfurt and 27.9 % in New York (UK Finance).

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Verbatim Quotes

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• “Andy Burnham has rightly prioritised cost of living measures in his first days as prime minister, but as the war in Iran rumbles on, energy prices will rise further – and the government will need to do more to protect households. That’s why it’s time to increase the tax on bank profits to cut bills.” — The TUC’s Nowak

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• “If you want strong economies, you want strong banks. It’s really important to have consistency and stability of policies.” — Barclays

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• “This is not a threat, it’s a very objective review,” — Stuart Gulliver

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