Budget 2026: PwC UK comments on bank surcharge

Peter Churchill, Banking & Capital Markets Tax Leader, PwC UK, said:  

“Many in the banking industry were approaching today as a test of how growth and competitiveness feature in practice within the Government's broader economic strategy. Our analysis shows that UK banks already pay relatively high rates of tax, and our initial modelling suggests that today's change will increase the total tax rate for a model bank operating in London from 46.2% to 48.2% for the 2027 calendar year.  

“We know from discussions with clients that predictability in the tax regime and administrative simplification is key to encouraging long-term planning and investment. Yet 'will they-won't they' speculation on increases to bank taxes has become an annual feature in the lead up to recent Budgets. An increase to the surcharge is not the outcome banks wanted, but the fifteen-month time limit takes the sting out of the announcement following weeks of speculation. In an environment where the UK is searching for growth, a stated intention to stabilise the tax regime for banks would be a welcome signal of the Government’s commitment to its Industrial Strategy objectives.”  

PwC models the Total Tax Rate (TTR) of a representative bank operating in London and other key financial centres. TTR measures all taxes borne by the model bank as a proportion of its commercial profit, capturing corporate income taxes, employer social security contributions, and other sector-specific taxes. More information on the methodology used can be found in our report for UK Finance here. 

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