Need to know
Campaigners say a tax on the huge profits made by banks would have offset the need for freezing income tax and National Insurance thresholds, which are putting a financial squeeze on ordinary workers
Rachel Reeves could have raised £12.5bn by taxing the windfall profits the UK’s four biggest banks have made from the British public, according to new analysis from research and campaign group Positive Money(Image: PA)
The Chancellor is facing intense scrutiny following reports that a windfall tax on big banks could have raised billions. Campaigners argue that Rachel Reeves opted to squeeze ordinary workers through stealth taxes rather than targeting the record profits of lenders.
- New analysis reveals that Rachel Reeves could have generated £12.5 billion by implementing a windfall tax on the UK’s four largest banks. This substantial sum significantly outweighs the revenue expected from freezing personal tax thresholds for another three years.
- HSBC, Barclays, NatWest, and Lloyds reported collective pre-tax profits of £45.7 billion for 2025, fuelled by sustained high interest rates. These massive earnings come at a time when many British families are still struggling with the ongoing cost of living crisis.
- Positive Money suggested a 38% levy on retail net income above £800 million, mirroring the existing tax on oil and gas giants. Had the Chancellor adopted this in the Autumn Budget, it could have provided a vital boost to the Treasury’s coffers.
- Instead of targeting bank windfalls, the government chose to extend the freeze on National Insurance and income tax thresholds until 2031. This “stealth tax” is predicted to drag more minimum wage workers into paying basic rate tax, even if they work part-time.
- The lack of a windfall tax coincided with the announcement of bumper pay packages and bonuses for top banking executives. NatWest’s chief executive received a £6.6 million package, marking the highest payout for a boss at the firm since 2006.
- Campaigners claim that banking share prices rose following the budget as a result of the Chancellor’s decision not to intervene. They argue that these rewards are a direct consequence of successful industry lobbying against fairer taxation measures.
- Public support for a bank tax remains high, with over 65,000 people signing a petition alongside backing from major unions and thinktanks. Despite this pressure, the Treasury continues to bear the cost of interest payments made by the Bank of England to commercial lenders.
- Sara Hall of Positive Money urged the Chancellor to distance herself from bank lobbyists and claw back these “unearned” billions. Prioritising corporate windfalls over the financial stability of ordinary people is a choice she insists should be urgently reversed.
