Exclusive: Chancellor urged to reverse Rishi Sunak’s tax surcharge cuts to claw back billions in lost revenue.

Tax Cuts Impacting Public Finances

Tax cuts for big banks have deprived the UK government of £6bn in revenues, according to campaigners. They are calling on Chancellor John Healey to increase taxes and ensure lenders pay their "fair share" in the upcoming budget.

Calculations by the Trades Union Congress (TUC), which represents unions with over 5.3 million members across England and Wales, reveal that the public purse is billions of pounds worse off due to tax cuts introduced under former Chancellor Rishi Sunak in 2023. The government agreed to reduce the bank surcharge—an additional levy on lenders’ profits—from 8% to 3% that year.

Context of the Tax Cuts

This move was intended to offset a rise in corporation tax from 19% to 25%, as the banking industry argued that higher taxes would disadvantage them compared to other major financial centers like New York. However, these cuts coincided with banks beginning to report significant earnings, driven by rising interest rates.

The UK’s four largest lenders—HSBC, NatWest, Barclays, and Lloyds Banking Group—have generated £200bn in pre-tax profits over the past five years. The TUC states that the 2023 cuts ultimately deprived the UK of tax revenues, with their analysis of HMRC corporate tax receipts showing:

  • £2.3bn lost in 2023-24
  • £1.7bn lost in 2024-25
  • £2bn lost in 2025-26

This totals £6bn over three years.

Call for Increased Surcharge

With banks reporting record profits, the TUC argues that the surcharge should be increased beyond its pre-2023 level in the budget scheduled for 28 October. They estimate that this could raise up to £60bn, which could help address rising household bills as part of Prime Minister Andy Burnham’s initiative to tackle the cost of living.