UK Chancellor John Healey plans to increase taxes on banks ahead of a Budget announcement in two weeks, senior banking executives told the BBC. The four largest UK banks generated roughly £15bn in profit during the first half of 2024.

Several tax-raising options are under consideration. The Treasury is reportedly leaning toward reversing a surcharge reduction that Conservative Chancellor Jeremy Hunt introduced in 2023, lowering the bank surcharge from 8% to 3%. Restoring it to 8% would raise approximately £2bn annually, though officials may settle on a rate between 3% and 8% to balance revenue needs against competitiveness concerns. Healey could alternatively raise the bank levy, a small percentage charged on loans.

A third option involves restricting banks' ability to use past losses to offset current profits. Lloyds has particularly benefited from this practice, offsetting losses from the 2008 financial crisis against recent profits. A moratorium lasting several years could yield an estimated £1bn annually while affecting fewer foreign-owned operations.

UK bank stocks fell sharply on Friday following reports of planned tax increases. Shares in Lloyds and NatWest each dropped more than 2%. Barclays declined slightly and HSBC rose slightly, reflecting their larger international operations and reduced exposure to UK-only tax changes.

The trade body UK Finance warned that additional bank taxes "would weaken competitiveness, discourage investment and job creation, and work against the government's ambition to deliver growth in every postcode".

Sir Philip Augar, a former City banker, told the BBC that banks enjoy "booming conditions" fueled by higher interest rates that widen lending margins. He said there is "room for a moderate increase" raising up to £3bn annually. Paul Nowak, general secretary of the Trades Union Congress, noted that Britain's four largest banks earn roughly £1bn weekly and stated they should "pay their fair share" of tax.

JPMorgan Chief Executive Jamie Dimon has warned that the UK already imposes one of the world's highest tax burdens on banks. Industry leaders argue that tax rises hitting UK banks while exempting foreign-owned operations would contradict government policy to support British business.

Healey described banks as part of "the crown jewels" of the UK economy while in Bangkok, adding he has "decisions to take in the Budget".