CBI warns further financial-sector taxes could hurt UK competitiveness
Rain Newton-Smith is due to urge Chancellor John Healey to give businesses breathing space as he prepares his 28 October Budget.
The Confederation of British Industry is due to warn in London on Wednesday that further taxes on financial services could hurt UK competitiveness, as Chancellor John Healey prepares his 28 October Budget. Its chief executive, Rain Newton-Smith, is expected to urge him to give businesses ‘breathing space’ amid reports of a possible increase in taxes on banks’ profits.
CBI warning over bank taxes
In remarks planned for the CBI’s autumn reception at the British Museum, Newton-Smith will call for support for the financial sector’s growth. According to the PA report published by the Evening Standard, she will say financial services support more than 650,000 jobs outside London and add more than £200 billion to the UK economy each year.
Newton-Smith is expected to argue that the sector already faces a higher tax burden than financial centres elsewhere. Adding to it would be an ‘own goal for our competitiveness’, she will say. Her argument is that the government should help struggling sectors without holding back those that are thriving.
The warning comes amid speculation that Healey could raise the surcharge on bank profits from 3% to 8%, reversing a reduction introduced by former chancellor Jeremy Hunt. The proposed rate remains a reported possibility; the Budget has yet to set out a decision.
Capital gains tax and the 28 October Budget
Separately, the Guardian reported, citing Treasury sources, that Healey has decided against raising capital gains tax in the Budget. That tax applies to gains made when people sell assets such as shares or second homes. According to the report, the chancellor is concerned a higher rate could reduce revenue if wealthy people delay sales or move assets abroad.
That position would go against earlier calls for an increase from Labour figures including Louise Haigh and Wes Streeting. Healey has said he wants government decisions to raise confidence and investment in British business, while recognising that costs including energy, regulation and labour have risen since Covid.
The Guardian also reported that Healey is poised to tax banks, whose earnings have benefited from higher interest rates. It said HSBC, NatWest, Barclays and Lloyds Banking Group generated £200 billion in pre-tax profits over five years. The scale of any bank-tax change remains unsettled ahead of the Budget.
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Sources and context
- Budget tax hikes for financial sector would be ‘own goal’, says CBIEvening Standard; report credits PA
- Healey to reject calls to raise capital gains tax in budgetThe Guardian
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