The UK is set to snatch a whopping £12bn from banks thanks to a new tax

Here’s how it works

The government is set to receive £12bn in revenues over the next five years from a new tax on bank profits.

In the Summer Budget, the chancellor announced the new 8% surcharge on banks’ UK profits above £25m.

The Treasury had predicted the levy would raise £6bn, however, industry experts claim it’s likely to be at least double that amount.

Richard Milnes, a partner at the accountancy firm EY told the FT the Treasury’s estimate was “highly conservative” and would reflect only the sum raised from 10 banks.

“Given this, the tax-take from the entire sector could be far more than double the HMT forecast,” he added.

Critics have said the bank levy disproportionally affects building societies, which the government should be encouraging to grow to improve plurality in the banking sector.

A spokesperson for the Treasury said: “HM Treasury’s costing is certified by the independent Office of Budget Responsibility.”

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