Philip Augar questions whether UK banks are "too big to tax" as they lobby Chancellor John Healey ahead of his October 28 Budget. The sector claims it already pays 47% in total taxes versus 28% in the US and under 40% in some EU countries, warning higher taxes would reduce SME lending and drive business abroad. JPMorgan's Jamie Dimon, planning a £3bn Canary Wharf headquarters, warned Prime Minister Andy Burnham of "adverse consequences." The City of London Corporation urges Healey to "do no harm" with "no more sector-specific taxes."
Augar argues the banks' case is weakened by extraordinary profitability since interest rates rose in 2022. Barclays, NatWest, and Lloyds returned nearly £12bn to shareholders from 2025 profits, with ringfenced UK banks reporting over 20% return on equity. The FTSE 350 Bank index is up 30% year-on-year.
Augar notes banks received massive 2008 taxpayer bailouts and now argue further taxation would jeopardize recovery from a crisis they created — a "heads we win, tails you lose" scenario. The Bank of England pays higher rates on commercial bank reserves than it receives on its Asset Purchase Facility gilts, costing the exchequer. Reducing capital returns could absorb moderate tax increases while sustaining lending.
Source: Financial Times Companies · Summarized by HeadlinesBriefing