Hunt reportedly plans to rule out a large tax hike for banks this autumn

Jeremy Hunt is believed to be preparing to rule-out a bank tax hike in the fall financial statement next week, after previously keeping the option open.

Widely reported was that the chancellor was considering scrapping plans for cutting bank fees to offset a wider increase in corporate tax. This raises concerns about the city’s future international competitiveness.

Hunt is looking to raise around £55 billion in next week’s fiscal autumn statement in a bid to curb government borrowing.

According to the Financial Times, Hunt will reduce the bank charge from 8% to 3%, as originally planned and proposed by Rishi Sunak. This is in response to corporate tax rising to 25% next year for the UK’s most profitable businesses.

Banks will have to pay a 28 per cent tax on their profits. This is higher than the 27 percent currently charged.

According to a Treasury source the rate for the additional bank fees was “still to determined”.

They stated, “Banks must continue to make a fair tax contribution to the public Treasury, but we recognize that it is important to preserve international competitiveness.”

“We will continue looking at the balance between generating revenue for public services and protecting the UK’s financial services industry.”

According to city figures, the UK’s global competitiveness in the marketplace will be further affected by Brexit if additional bank fees are not reduced.

UK Finance, a lobbying group in the city, has reported that the tax burden for financial service firms in London was higher than for those based in New York or Dublin.

A spokesperson for UK finance stated that the government’s decision to raise corporate tax, as originally planned, also included a reduction of additional fees charged to banks.

“We urge government to carefully consider the additional cost and not compromise the competitiveness and viability of the UK financial and banking industry.”

Hunt will raise taxes and decrease spending in real terms for the future in his fall statement of November 17. The finance minister also considered proposals to freeze income tax limit as part of a stealthy tax grab.

He is looking at ways to increase capital gains tax and dividend tax, as well as crack down on non-domestic business.

After the Covid and a series o energy price freezes which exploded the UK’s debt buildup to the hundreds of billions, the government wants to cut government borrowing.

The September mini-budget, which is almost entirely reversed, also increased government borrowing costs. Long-term bond yields rose amid a huge sell-off.