UK Finance Warns Government Against New Tax Measures

Banks in Britain, which have benefited from surging profits due to higher interest rates, have intensified lobbying efforts against potential tax hikes.

Britain’s finance industry on Friday urged the new Labour government to phase out additional taxes on banks, warning that lenders in London face a higher total tax burden than in rival cities like New York and Frankfurt.

Bank trade body UK Finance made this appeal as part of its submission to the government ahead of Labour’s first budget statement on October 30.

Banks in Britain, which have benefited from surging profits due to higher interest rates, have intensified lobbying efforts against potential tax hikes.

Industry sources previously told Reuters that finance minister Rachel Reeves may consider taxing the sector to bolster public finances.

The previous Conservative government reduced the surcharge on bank corporation tax, but UK Finance wants it scrapped entirely.

“We strongly welcome the commitment to publish a roadmap for business taxation and believe that it should include a specific roadmap for banks, with a plan to phase out the bank corporation tax surcharge and the bank levy over time,” UK Finance said.

The group also reiterated its long-standing recommendation to abolish the 0.5% stamp duty on UK share purchases, aiming to encourage more investment in Britain’s struggling stock markets.

The Investment Association, representing fund managers, separately stated that the government should eliminate the stamp duty.

Labour has mentioned it is reviewing the pensions system to explore ways to boost investment in the UK.

However, some analysts argue that removing stamp duty alone would not significantly increase demand for shares.

They point to other factors, such as the decline in defined benefit pension schemes and the limited appeal of British-listed companies, as more significant issues.

UK Finance also renewed its call for technology, social media, and telecom companies to assist in reimbursing victims of fraud.

New rules coming into effect this month will require banks and payments firms to reimburse fraud victims up to £85,000, a change from the current voluntary approach.