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Budget 2025: Possible Bank Surcharge Increase

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Bright Insights: Autumn Budget 2025

At Bright Solicitors, we help private companies and professionals stay ahead of regulatory changes that can impact their business. With the Autumn Budget fast approaching, one area drawing attention is the bank surcharge. 

What’s the bank surcharge- and what might be changing?

The bank surcharge is an additional tax on the profits of UK banks, currently set at 3%. It was reduced from 8% in 2021 to offset the rise in Corporation Tax.

But with UK banks reporting record profits (and the government facing a significant fiscal shortfall), there’s growing pressure to raise the surcharge again. Options reportedly under consideration include:

  • A modest increase to 5%.
  • A full reversal back to 8%.
  • A steep hike to as much as 35%, mirroring the windfall tax on energy companies.

The final decision may be revealed in the November Budget.

What Could This Mean for Businesses? 

Although the surcharge directly targets banks, the ripple effects could be felt across the economy: 

  • Higher borrowing costs: Banks may pass on the increased tax burden to customers through higher interest rates or stricter lending criteria. 
  • Reduced access to finance: Tighter lending could impact SMEs and private companies seeking funding for growth or acquisitions. 
  • Economic slowdown: With banks playing a key role in financing business activity, increased taxation could dampen investment and expansion. 
  • Some banks (particularly those with global operations) may be less affected, but UK-focused lenders like NatWest and Lloyds could feel the impact more acutely. 

What You Can Do to Prepare

Whether you’re a business owner, investor, or advisor, here’s how to stay ahead: 

  • Monitor lending conditions: Be alert to changes in borrowing costs or credit availability. 
  • Review financing plans: If you’re planning to raise capital or refinance, consider acting before any changes take effect. 
  • Assess cash flow resilience: Understand how tighter lending or higher interest rates could impact your operations. 
  • Support your clients: If you advise businesses, be ready to help them navigate a shifting financial landscape. 

Need Help? Get in Touch 

Our team is here to help you understand how regulatory changes could affect your business. From reviewing funding strategies to advising on corporate structuring, we’re ready to support you through the Budget and beyond. 

Follow us for more legal insights or contact our Corporate Department for more information.