Report says UK bank tax rise will be temporary and below 8%
Before the October 28 budget, pre-budget reports had expected the surcharge to rise from 3% to 8%.
Published
The surcharge is currently 3% on a banking group's profits above a £100 million annual allowance, paid on top of corporation tax, according to HMRC figures cited by EconoTimes.
Pre-budget reports had expected a rise to 8%. CNBC said that would raise about £2 billion a year. Goldman Sachs, as reported by Briefs.co, estimated that an 8% surcharge would cut net profit by 2% to 3% at Barclays and by 6% to 7% at Lloyds and NatWest.
Bank shares reacted to earlier reports of a rise. On Friday, October 16, Lloyds and NatWest fell on reports of a surcharge increase, CNBC said. BigGo Finance reported that Lloyds fell as much as 2.3% that day.
For US bank investors the link is indirect, because this is a UK tax and budget story. It may also ease comparisons traders draw with possible bank-specific levies in other countries. Coverage on October 15 had raised concern that such a levy could become a severe, open-ended drag on UK bank earnings. Other signs that day suggested the Chancellor was still stressing fiscal discipline rather than punitive targeting of the sector.
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