Bank surcharge cut cost UK £6bn over three years, TUC estimates

The Trades Union Congress estimates that cutting the UK bank surcharge cost the public purse £6bn over three financial years, according to a Guardian report published on 9 October 2026. The union body is pressing for higher taxes on lenders at the upcoming Budget to help fund reductions in household energy bills.

The new development is the TUC’s assessment of revenue forgone and its renewed call for action before the 28 October Budget. It is not an announced tax change. The surcharge reduction took effect in April 2023, alongside a corporation-tax increase that raised banks’ combined headline rate.

What the TUC’s £6bn estimate measures

The Guardian reports that the TUC calculated the estimate using HM Revenue & Customs corporate tax receipts. It puts revenue forgone at £2.3bn in 2023–24, £1.7bn in 2024–25 and £2bn in 2025–26. Together, those estimates total £6bn over the three financial years.

That figure is an estimate of what the government could have collected under a different surcharge policy. The report does not reproduce the calculation spreadsheet or explain all its assumptions, including how the change in the tax-free allowance was treated. The calculation has not been independently reproduced.

How bank taxes changed in April 2023

HMRC’s policy paper, published on 27 October 2021, set out a reduction in the surcharge from 8% to 3% from 1 April 2023. It also increased the banking-group allowance from £25m to £100m, raising the amount of eligible profits a group could earn before paying the surcharge.

The surcharge applies to banking companies, including building societies, in addition to corporation tax. At the same time as the surcharge fell, the corporation-tax rate rose from 19% to 25%. HMRC therefore described the combined headline rate on bank profits as increasing from 27% to 28%.

The surcharge cut consequently does not mean that banks’ combined headline profit-tax rate fell. HMRC said the policy sought to maintain international competitiveness and retain mobile business and jobs. It said the higher allowance would support smaller and mid-sized banks and competition; those were the government’s stated objectives.

The 2021 paper forecast revenue costs from the surcharge changes of £830m in 2023–24, £975m in 2024–25 and £995m in 2025–26, excluding revenue from the corporation-tax increase. Those historical forecasts are not actual receipts or a like-for-like check of the TUC’s later estimate, which may use different assumptions.

What higher bank taxes would fund

The TUC’s campaign proposes using additional bank-tax revenue for a social energy tariff aimed at low- and middle-income households, with emergency support when energy prices rise. Its campaign page estimates that a 35% surcharge could raise £60bn over four years. This is a campaign projection, not a Treasury commitment.

The Guardian reports two other TUC projections: restoring the surcharge to 8% could raise £9bn over four years, while a 16% rate could raise £24bn. The exact fiscal years covered by these projections are not specified in the report.

The TUC advertises annual savings under its proposed tariff of £517 for the lowest-income households, £345 for middle-income households and £172 for upper-middle earners. These are proposed benefits, not reductions households have already received. The campaign estimates the scheme would cost £6bn annually, including emergency support, and says a 16% surcharge could cover it.

That £6bn annual spending estimate is separate from the £6bn in historical revenue forgone reported on 9 October. One describes the proposed yearly cost of energy support; the other covers the TUC’s estimate of the surcharge cut’s effect across three financial years.

Banks oppose increases ahead of the Budget

UK Finance chief executive David Postings opposed further increases in comments reported by the Guardian. He argued that profitable banks support lending, investment in services and shareholder returns benefiting savings and pensions. He also said UK banks already faced higher total tax rates than competitors in other financial centres and warned of risks to investment and jobs.

Those warnings are the industry group’s predictions. A Positive Money spokesperson, also quoted by the Guardian, supported reversing the surcharge cut, arguing that banks had benefited from higher interest paid by customers and the Bank of England.

The next stated policy milestone is the 28 October Budget. The Guardian said it had contacted the Treasury for comment, but its report contains no Treasury response or commitment to change the surcharge. Whether the government will adopt any of the TUC’s proposals remains unresolved.