EXCLUSIVE: As Britain’s big bank prepare to announce a round of bumper half year profits, critics argue a windfall could pay for the government’s cost of living crusade
Andy Burnham has been urged to hit big banks with a tax hike amid forecasts that Britain’s biggest lenders are set to rake in profits of around £55billion this year.
Critics claim banks are a biggest beneficiary of the cost of living crisis thanks to higher interest rates and money made from reserves sat in the Bank of England. While it is argument made in the past, they are hoping to convince new PM Andy Burnham and Chancellor John Healey to take action.
The call is likely to be further fuelled by half year results from banks over the next two weeks, which are set to confirm another wave of bumper profits.
Barclays will begin the reporting season on Tuesday with analysts expecting the industry giant to announce a £700million jump in profits in the first six months of 2026 to £5.9billion, from £5.2billion a year ago. It will be followed on Thursday by Lloyds Banking Group, where analysts forecast profits surged 17% to £4.1billion, then NatWest on Friday with similar profits of £4.1billion. HSBC reports its results the following week but there are no firm estimates at this stage.
The four big banks combined are estimated a this stage to make £55.3billion profit for the whole year, up sharply from 2025, and equivalent to around £1,750 every second.
Sara Hall, co-executive director at Positive Money, said: “With Britain’s big banks on course for yet another year of record profits, let’s not forget they’ve been one of the biggest beneficiaries of this cost of living crisis. Higher interest rates have allowed them to suck these profits from both their customers and the Treasury, who are footing the bill for higher rates paid on banks’ risk-free reserves at the Bank of England.
“The new Prime Minister has a clear chance to break away from the unpopularity of his predecessors by standing up to City lobbyists and taxing banks’ unearned windfalls to cover his announcements to tackle the cost of living crisis and help millions of households across the country.”
Trade union body the TUC analysis argues for an increase in the 3% surcharge on banks’ profits, which is on top of the 25% corporation tax they pay. Upping it to 8% – reversing a cut by the Tories – could raise £9billion over four years, it says, while doubling it to 16% would rake in an estimated £24billion. A 35% surcharge, which would be the same level as the windfall tax the Conservatives imposed on energy companies, would deliver £60billion over four years, the TUC has already said.
The potential tax take could help fund the new government’s pledge to ease the cost of living crisis for millions of households.
TUC general secretary Paul Nowak said “Taxing banks’ eye-watering profits to cut energy bills for the majority of people is just plain common sense. The big banks are raking it in off the back of higher interest rates and mortgage misery across the country.
“At the same time households have faced punishing bill rises over the past five years – with the average household paying an extra £2,500 in total since 2021. It’s a matter of fairness. Banks can well afford to pay more tax to support those struggling to get by.”
Lord O’Neill, a former Goldman Sachs chief economist and adviser to Mr Burnham, has warned against hitting businesses with more taxes, telling Sky News earlier this month the government “certainly shouldn’t”.
It comes as recent figures revealed banks dished out £16.4billion in bonuses in the first three months of this year, analysis shows.
A spokesperson for banks’ trade body UK Finance said: “The banking sector makes a significant contribution to the UK’s public finances, paying over £43billion in taxes last year. Banks based here pay both a corporation tax surcharge and the bank levy, resulting in a higher total tax rate than in other major financial centres. Increasing these sector-specific taxes would reduce the UK’s international competitiveness and make it harder to attract investment.”
How much the top bosses at Britain’s ‘big four’ banks were paid:
- Charlie Nunn, chief executive of Lloyds Banking Group, netted £7.4million for last year, of which £4m was bonuses.
- Paul Thwaite, boss of NatWest, for 2025 also received £4m in bonuses as part of a £6.5m package.
- Barclays boss CS Venkatakrishnan raked in almost £15m, most of it in performance-related payouts.
- HSBC chief executive Georges Elhedery got a total package worth £6.6m last year, up from almost £5.6m in 2024.
