Lloyds Banking Group’s finance chief has suggested tax rises on UK banks could hinder lending and investment as the sector braces for a possible raid in the government’s maiden Budget next week.
Speaking after Lloyds’ third quarter results this morning, William Chalmers said banks are already among Britain’s biggest taxpayers and the FTSE 100 group was hoping for a “pro-growth” statement on 30 October.
“It is important to have a competitive, a stable tax regime to encourage the type of investment, and indeed the type of lending, that we would seek to do to promote the growth agenda,” Chalmers told reporters.
“We do in that context look forward to the Budget with the clarity that it will provide. And we note the government’s commitment to growth, and very much hope that the Budget is going to be consistent with that agenda.”
Banks, which enjoyed record profits from higher interest rates last year, are considered a potential target for a tax raid as the government tries to fill an alleged £22bn “black hole” in the public finances.
The UK has charged a bank levy since 2011 and introduced a corporation tax surcharge on lenders’ profits in 2016. Britain’s banking sector paid a record £44.8bn in taxes in 2023/24, according to an estimate by PwC.
Influential lobby groups UK Finance and TheCityUK have urged the government to phase out the bank levy and corporation tax surcharge, arguing this would bring Britain’s tax rate closer to rival jurisdictions.
The Treasury has neither committed to nor ruled out raising taxes on the financial sector in the Budget.
“I would comment that the bank sector, and certainly [Lloyds] within that, are one of the UK’s largest taxpayers already,” Chalmers said.
“And actually, we take some pride in making our contribution to the society of which we’re a part.”
He added that tax policy was “a role for the government” and Lloyds “will play [its] role in terms of achieving our purpose of helping Britain prosper no matter what the tax environment.”
Lloyds’ earnings for the third quarter beat estimates after the lender set aside less than expected for bad loans.