A windfall tax on the profits of Britain’s four biggest banks could raise £11bn for the Treasury according to new analysis from think tank Positive Money.
Britain’s ‘Big Four’ banks – Barclays, NatWest, Lloyds and HSBC – are on track to make a record £48bn profit in 2025, based on their results for the first half of this year, the last of which were announced by HSBC this morning. Collectively, their pre-tax profits so far this year stand at £24.1 bn.
Banks have posted record profits in recent years thanks to the Bank of England paying higher interest rates, the cost of which is borne by the public, with the Treasury spending tens of billions of pounds a year to cover the central bank’s payouts to the City. Positive Money proposes the UK follows Spain in recouping these windfalls, with a levy targeting net income from domestic retail banking above a threshold of £800m.
Positive Money estimates that a 38% levy, in line with the successful Energy Profits Levy on oil and gas companies, would be expected to bring in £11.3bn from the big four banks this year, based on their results for the first half of 2025.
The group says that this would be enough to scrap the two-child benefit cap, estimated to cost the government up to £3.5bn annually, and to cover the cost of the government’s recent U-turn on welfare.
The CEOs of Lloyds Bank, HSBC and Barclays have all warned the chancellor against increasing taxes on bank profits in the last week, arguing it would threaten the City of London’s international competitiveness and the UK’s economic growth.
But the windfall levy proposed by Positive Money has been designed to only target banks’ domestic retail operations, which mitigates the risk of banks threatening to move their global or investment banking operations elsewhere.
Simon Youel, head of policy and advocacy at Positive Money, said: