City steps up opposition to Healey bank tax raid in budget

Some of Britain's leading business groups are mobilising to intensify their opposition to a Treasury tax raid on the banking sector in this month's budget, days before sector chiefs meet the chancellor in person for the first time.

Sky News has learnt that trade associations said to include the UK Finance, AFME and TheCityUK have been circulating a letter to send to John Healey, the chancellor, in which they intend to warn that increasing the tax burden on the banking sector risks driving business out of Britain without raising any additional revenue.

The CBI is also said to have been involved in the circulation of the letter.

A draft version seen by Sky News said: "While we recognise the challenging fiscal pressures facing government, it is important to note that our industry already faces a higher tax burden than our key international competitors.

"Further increasing that burden through any additional sector-specific measures would make it harder to channel finance and liquidity into businesses trying to invest and grow in the UK.

"As well as weakening investor confidence and damaging UK attractiveness, a higher tax burden may not necessarily generate higher tax receipts if capital, people and businesses move elsewhere.

"It could reduce the availability of finance and protection for households and businesses, and risk undermining the growth that both you and the prime minister have rightly identified as the key to the country's long-term success."

The business groups' intervention is the latest in a series of efforts to head off a tax raid by Mr Healey on the banking industry later this month.

UK Finance, whose members include Barclays, HSBC, Lloyds Banking Group and NatWest Group, has already written to him in recent weeks to protest at the prospect of a windfall tax or significant increase to the corporation tax surcharge applied to bank profits.

Earlier this week, Sky News revealed that a dozen mid-tier banks, including Revolut and Monzo, had called on the chancellor to lift the threshold at which the surcharge is applied.

In the latest letter from the trade associations, City bosses replayed Mr Healey's Labour Party conference speech, in which he "set out your ambition for a stronger partnership between government and business and argued that 'the only long-term answer is growth'."

"Your forthcoming budget is an important opportunity to reinforce the conditions for that partnership," their draft said.

"A strong and internationally competitive financial and related professional services industry is essential to achieve the government's growth objectives and to support resilience and prosperity in every postcode across the country.

"A key component of that is maintaining a stable and internationally competitive tax environment.

"This gives firms and investors the confidence to provide the capital, lending, investment, insurance and expertise on which businesses and households rely."

They added: "Tax decisions should be assessed not simply by the revenue they are expected to raise in the short-term, but by their effects on investment, competitiveness and the capacity of firms to support households and businesses across the UK over time."

"Our organisations share the view that the UK needs a tax framework that is stable, predictable and internationally competitive, supporting long-term investment and growth."

Mr Healey will meet bank bosses next Tuesday, although he is unlikely to talk directly about the possibility of industry-specific tax rises.

Unions have been calling on the chancellor to raise billions of pounds from the industry to fund government commitments elsewhere, amid a period of bumper profits for the UK's biggest banks.

None of the business groups contacted by Sky News on Friday afternoon would comment.

(c) Sky News 2026: City steps up opposition to Healey bank tax raid in budget