Andy Burnham Bank Tax Impact: What It Could Mean for UK Businesses?

As of September 2026, no new UK bank tax has been confirmed. The current debate centres on whether existing banking taxes could be increased or a new levy introduced in the 28 October 2026 Budget. For businesses, the main concern is how any change could affect lending, investment and access to finance.

Business loan costs could rise if banks pass part of the additional tax burden on through higher lending charges, while access to SME finance could tighten if lenders become more selective about borrowers.

Investment and employment could also be affected if international banks reconsider future UK expansion, and concerns around the competitiveness of the UK banking sector may grow if its overall tax burden increases compared with other major financial centres.

However, the actual impact remains uncertain because no final tax structure, rate or duration has yet been announced.

Last Updated: 22.09.2026

Has Andy Burnham Announced a New Bank Tax?

Andy Burnham’s Government has not confirmed a standalone bank windfall tax or announced a new bank tax rate.

Most of the current debate relates to speculation ahead of Chancellor John Healey’s first Budget and calls from campaign groups and trade unions for banks to make a larger contribution.

Healey has said that responding to individual tax speculation before the Budget would not be productive. This means businesses should distinguish between proposals being discussed publicly and measures that have actually become government policy.

There could ultimately be several outcomes. The Government might leave existing banking taxes unchanged, increase one of the existing charges or introduce a differently structured temporary levy.

Until the Budget provides details, estimates of the Andy Burnham bank tax impact remain scenarios rather than confirmed effects.

Why Are Higher UK Bank Taxes Being Discussed?

The debate has largely been driven by strong banking profits alongside pressure on public finances and household finances.

Large banks have benefited in recent years from periods in which interest earned from loans and other assets increased faster than the interest paid to depositors. That widened net interest margins for parts of the banking sector.

Supporters of additional taxation argue that unusually strong profits provide an opportunity for banks to contribute more towards government spending.

Banks and industry representatives take a different view. They argue that lenders already face sector-specific taxes and that a higher overall burden could influence international investment decisions.

Both arguments depend heavily on the design of any policy. A temporary charge on unusually high profits would not necessarily have the same consequences as permanently increasing the tax applied to normal banking profits.

What Did Jamie Dimon Say About Higher Bank Taxes?

JPMorgan chief executive Jamie Dimon has become one of the most prominent voices opposing a further increase in UK banking taxes.

Dimon met Prime Minister Andy Burnham and Chancellor John Healey in September amid discussions about possible tax changes ahead of the Budget. He has warned that higher taxation could affect investment and employment decisions.

JPMorgan employs around 23,000 people in the UK and has plans for a major new headquarters in Canary Wharf.

The bank has therefore become an important example in the wider debate about whether taxation can affect where international financial institutions place future investment.

However, warnings about future investment should not be treated as proof that banks will leave Britain if taxes rise.

Large international banks consider many factors when deciding where to invest, including access to skilled workers, regulation, infrastructure, financial markets, property costs and taxation.

The relevant business question is therefore whether a tax change becomes significant enough to alter those investment calculations.

What Types of Bank Tax Could Be Introduced?

There is no single type of “bank tax”. Several possible approaches could produce different consequences.

Bank Corporation Tax Surcharge

Banks already pay the standard Corporation Tax rate and can also face the Bank Corporation Tax Surcharge.

The surcharge is currently 3% on qualifying banking profits, subject to a £100 million group allowance. The rate was reduced from 8% to 3% from April 2023 as the main Corporation Tax rate increased to 25%.

Increasing this surcharge would be one relatively straightforward way of collecting more tax from banking profits.

Bank Levy

The Bank Levy operates differently because it applies to specified equity and liabilities on banks’ UK balance sheets.

Current rates are 0.05% for long-term chargeable equity and liabilities and 0.10% for short-term chargeable liabilities.

A change to the Bank Levy could therefore influence balance-sheet and funding decisions rather than simply reducing post-tax profits.

Windfall Tax

A windfall tax could instead be designed to capture profits considered unusually high because of particular economic conditions.

Possible tax bases could include excess profits, unusually high net interest income or another measure of banking revenue.

Without a confirmed proposal, it is not possible to calculate precisely how such a tax would affect UK lenders or their customers.

How Are UK Banks Taxed Currently?

Banks already operate under a tax framework that contains charges not applied to most ordinary businesses.

A large banking company can potentially face:

• 25% Corporation Tax on taxable company profits
• 3% Bank Surcharge on qualifying banking profits above the relevant allowance
• Bank Levy on specified balance-sheet liabilities and equity
• Employment Taxes connected with employees
• Other Business Taxes depending on the bank’s activities

This distinction matters when assessing claims that banks either pay too much or too little tax.

Comparing only one individual banking tax with Corporation Tax paid by an ordinary company does not capture the complete tax position.

How Much Tax Does the UK Banking Sector Pay?

HMRC’s latest completed annual statistics show that PAYE, Corporation Tax, Bank Levy and Bank Surcharge receipts associated with the banking sector totalled £35.2 billion in 2024/25.

That consisted of:

• £24.1 billion in PAYE Income Tax and National Insurance
• £8.8 billion in Corporation Tax
• £1.3 billion from the Bank Levy
• £1.0 Billion from the Bank Surcharge

The total was £1.9 billion lower than the previous financial year.

It is important not to describe the entire £35.2 billion as tax taken directly from bank profits. A substantial part represents PAYE and National Insurance connected with banking-sector employees.

HMRC is due to publish its next banking-sector tax statistics on 1 October 2026, providing another opportunity to assess how receipts have changed.

Why Do Some Sources Use Different Banking Tax Figures?

Businesses researching UK bank taxation may encounter figures higher than HMRC’s £35.2 billion total.

The difference does not necessarily mean one figure is incorrect.

Different studies can include different taxes, employee contributions and indirect tax costs. Some industry estimates use a wider concept known as the total tax contribution, whereas HMRC’s published banking statistics cover specifically identified taxes.

Any comparison should therefore consider what each figure actually measures rather than placing different totals side by side without explanation.

This is particularly important when tax figures are used to support arguments either for or against additional banking taxation.

What Happened When Other European Countries Taxed Banks?

The UK would not be the first European country to consider additional taxation following a period of strong bank profitability.

Research by the International Monetary Fund found that 12 of the EU’s 27 member states had introduced new bank taxes from 2023. The measures varied considerably in their tax bases, rates and duration.

Lithuania, for example, introduced a levy targeting excess net interest income, while the Czech Republic applied a tax to excess bank profits. Other countries have used different approaches based on revenues or balance sheets.

The European experience demonstrates why the exact structure of a UK policy would matter.

A tax on excess profits can create different incentives from a permanent balance-sheet levy. A temporary tax can also produce different behaviour from a permanent increase in the normal rate of taxation.

The results in other countries should not automatically be treated as forecasts for Britain because banking markets, tax systems and economic circumstances differ.

How Could a Higher Bank Tax Affect Small Businesses?

For SMEs, the potential impact would mainly come through banks’ responses rather than through the tax itself.

Business Loan Costs

One possibility is that lenders could try to protect returns by changing loan pricing.

However, this does not mean a three-percentage-point increase in a banking tax would lead to a three-percentage-point rise in SME borrowing rates.

Business loan pricing is influenced by several factors, including:

• Bank Rate
• Wholesale Funding Costs
• Borrower Credit Risk
• Loan Duration
• Available Security
• Competition Between Lenders

The Bank of England reported that SMEs borrowed a net £2 billion from banks and building societies in March 2026, while annual SME borrowing growth increased to 3.7%.

That shows bank finance remains significant for smaller companies.

Access to SME Finance

Credit availability could be as important as interest rates.

If a new tax materially reduced the expected return from certain types of lending, banks could potentially become more selective about borrowers.

Businesses with limited trading histories, weaker cash flows or fewer assets available as security could be more exposed to tighter lending standards.

Companies with strong balance sheets may see considerably less effect.

Academic evidence reviewed by the IMF has found examples in which higher bank taxes were associated with higher loan rates and lower lending volumes.

The IMF also notes that the scale and direction of effects depend on the type of tax and banking environment.

That evidence demonstrates a possible mechanism, not a guaranteed outcome for the UK.

Business Investment

If financing became more expensive or difficult to secure, some companies could delay investment in property, equipment, technology or recruitment.

Again, the magnitude would depend on the eventual tax.

A modest measure that had little influence on banking decisions could have limited consequences for SMEs. A significantly larger or permanent measure could produce a stronger response.

Jobs and Supply Chains

Banks themselves are also major purchasers of business services.

Technology companies, accountants, consultants, commercial property businesses, recruitment firms and other suppliers can benefit from financial-sector investment.

If international lenders reduced future UK expansion, some of the effects could therefore extend beyond direct banking employment.

Could Banks Move Jobs and Investment Out of the UK?

Warnings about banks leaving Britain should be interpreted carefully.

London remains one of the world’s major financial centres because of its capital markets, financial expertise, professional services, legal system and concentration of international institutions.

Those advantages do not disappear because one tax changes.

At the same time, global banks have choices about where incremental investment is placed.

A multinational institution deciding where to add its next trading desk, technology operation or group of employees can compare London with locations such as New York, Dublin, Frankfurt or Paris.

The more realistic issue may therefore be gradual changes in future investment rather than an immediate departure of major banks.

What Would a UK Banking Exodus Actually Look Like?

Businesses should look for measurable changes rather than relying solely on political or industry rhetoric.

Indicators could include:

• Major Office Projects Being Cancelled Or Reduced
• New Jobs Being Located In Other Financial Centres
• Declining UK Employment At International Banks
• Functions Being Transferred To Overseas Offices
• Lower Planned Capital Investment In UK Operations
• Banks Explicitly Linking Decisions To UK Tax Changes

Evidence of those developments after a tax change would provide more information about its effect than warnings made before the policy was known.

How Could Different Bank Tax Designs Affect Businesses?

The eventual impact could vary considerably depending on what the Government chooses.

Possible Approach	Potential Business Effect
Higher Bank Surcharge	Reduces banks’ post-tax profits and could affect marginal lending or investment decisions
Temporary Windfall Tax	Targets unusually high profits for a limited period
Net Interest Income Tax	More directly targets gains associated with interest margins
Higher Bank Levy	Could influence balance-sheet and funding decisions
No Additional Bank Tax	Leaves the current tax structure broadly unchanged

None of these outcomes automatically produces a particular change in SME loan rates.

Tax size, duration, exemptions, competition and banks’ individual financial positions would all affect how costs were absorbed.

What Should Small Businesses Watch Before the October 2026 Budget?

The Autumn Budget on 28 October 2026 should provide much more clarity about whether the current discussion results in policy. HM Treasury has formally confirmed the Budget date.

Businesses should pay particular attention to four details:

1. Whether A New Tax Is Actually Introduced
2. Which Banks And Activities Fall Within Its Scope
3. Whether The Measure Is Temporary Or Permanent
4. How Banks Respond Through Lending, Investment And Pricing

The first point is particularly important. Businesses should avoid restructuring borrowing arrangements purely because a possible bank tax is being discussed.

What Should Small Businesses Do Now?

Businesses do not need to make major financial decisions solely because of speculation about an additional bank tax.

Normal financial preparation is more useful.

Companies with existing borrowing can review when fixed-rate periods end, understand refinancing dates and maintain accurate financial records.

Businesses expecting to seek funding can also consider more than one finance provider rather than becoming dependent on a single bank.

Companies planning large investments may find it useful to model how the project would perform under several borrowing-cost scenarios.

These measures are useful regardless of whether a new banking tax appears in the Budget.

Conclusion

The Andy Burnham bank tax impact on UK businesses cannot yet be calculated because the Government has not confirmed a specific new banking tax.

Supporters of higher taxation point to strong bank profits and argue that the sector could make a greater contribution to public finances.

Banking executives and other critics argue that increasing the tax burden could affect lending, employment and Britain’s competitiveness as a financial centre.

For small businesses, the practical issue is how banks respond if policy changes. Business borrowing could potentially be affected through interest rates, credit availability or lending criteria, but none of those effects is automatic.

The most important information will therefore come from the exact policy, if one is announced, and from observable changes in lending and investment afterwards.

FAQs

Has Andy Burnham Confirmed a New Bank Tax?

No specific new bank tax had been confirmed as of 22 September 2026. Chancellor John Healey has said he will not comment on individual tax measures ahead of the 28 October Budget.

Could a Bank Tax Increase Business Loan Rates?

It could influence loan pricing if banks attempted to recover part of the additional cost, but business lending rates are affected by many other factors. A tax increase would not automatically result in an equivalent rise in borrowing rates.

Would Higher Bank Taxes Affect SME Lending?

They could affect the amount or type of lending offered if banks changed their risk and return calculations. However, the effect would depend on the design and scale of the tax, competitive conditions and individual lenders’ responses.

Could Banks Leave the UK Because of Higher Taxes?

Higher taxes could influence where international banks place future investment and jobs, but tax is only one factor in location decisions. Claims of a widespread banking departure remain warnings rather than an established consequence.

When Will the Government Confirm Any Bank Tax Changes?

The Government’s Autumn Budget is scheduled for 28 October 2026. That is the key date for businesses watching whether current discussion develops into a confirmed tax measure.