Chancellor of the Exchequer Jeremy Hunt plans to cut a surcharge on UK bank profits, effectively shielding them from a massive increase in the country’s corporate tax rate as the government seeks to maintain the competitiveness of Britain’s finance industry. tries.
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UK banks currently pay an 8% surcharge on profits on top of a corporation tax rate of 19%. Due to increase in corporation tax to 25% from April, Hunt intends to reduce surcharge to 3%said two officials familiar with the matter, who spoke on condition of anonymity because no final decision has been taken.
That means the overall tax rate on the bank’s profits would still rise from 27% to 28% – but if Hunt didn’t touch the surcharge, he would have faced the 33% level. The City of London warned that it risked losing out on other financial centers such as Dublin and New York if the bank tax rate went so high.
A Treasury spokesman declined to comment on tax measures ahead of a fiscal event.
Hunt is expected to include an announcement on bank surcharges when he sets out on November 17 a package of more than £50bn ($57bn) for spending cuts and tax hikes, as Rishi Sunak’s government follows Britain’s former tries to stabilize the public finances of the The disastrous tenure of Premier Liz Truss.
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Banks in the UK have been paying additional taxes for over a decade to reflect the taxpayer support they received during the 2008 financial crisis. Their balance sheet has increased by around £25 billion since starting in 2011, while surcharges have generated just over £8 billion since 2016.
When Sunak was the first to announce his plan to increase the corporation tax to 25% In 2021 – when he was still Boris Johnson’s chancellor – he also promised to reduce bank surcharges to 3%, fueling speculation this time around.
But city officials also worried that the pressure to fix Britain’s fiscal hole in the market turmoil triggered by Truss’s economic plans would mean Sunk and Hunt could not act on the surcharge.
In his statement next week, Hunt is expected to announce a slew of other measures, including an expanded untaxed tax on energy firms’ profits, freezing foreign aid and raising capital gains tax. The chancellor is also considering paying more Britons the top rate of income tax.
This story has been published without modification in text from a wire agency feed. Only the title has been changed.
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