Budget raises taxes on banks, property and savings
Chancellor John Healey says targeted increases will fund household support and protect the government’s fiscal plans.
The government will temporarily increase the bank corporation tax surcharge and raise taxes on property and savings income under the 2026 Budget. Chancellor John Healey said the measures would help fund household support while preserving the government’s fiscal rules.
The bank corporation tax surcharge will rise from 3% to 6% for 15 months, from 1 January 2027 to 31 March 2028, according to the Treasury’s Budget document. The government estimates that the temporary increase will help finance a £2.6 billion Household Energy Payment scheme.
The payment will provide £100 to households in England in council tax bands A to D from January 2027. The devolved governments are due to receive funding through the Barnett formula, although decisions on how to distribute it will be taken in Scotland, Wales and Northern Ireland.
The Treasury says the Budget also increases taxes on income from property and savings while retaining the £20,000 annual cash ISA allowance.
The measures place different pressures on banks, landlords and savers. Banks face a direct increase in their surcharge, while landlords and people receiving savings income may see a larger share of returns taxed. The precise effect will depend on individual circumstances and later legislation.
The government presents the package as a short-term intervention during a period of higher household costs. Its argument is that banks and people with property or savings income can make a greater contribution while lower-band households receive help with energy bills.
Critics are likely to question whether the approach will reduce investment, raise rents or weaken the attractiveness of UK banking. Those effects are not established by the Budget announcement itself. The Office for Budget Responsibility’s detailed forecasts and parliamentary scrutiny will be important for assessing the eventual economic impact.
This is a separate development from the Budget’s previously reported energy payment. It concerns the financing and distributional choices behind the package, rather than the payment’s existence.
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One story, several perspectives
What is established
- The Budget raises the bank surcharge temporarily.
- The government is introducing a £100 payment for eligible households.
- The Budget changes taxation of property and savings income while retaining the £20,000 cash ISA allowance.
Left
Arguments The package asks sectors and households with greater financial capacity to contribute more while directing immediate help to households facing energy costs.
Values Redistribution, social protection and reducing inequality.
Consequences Supporters would expect lower-income households to gain more than they lose, while accepting that banks, landlords and higher-income savers may pay more.
Centre
Arguments A temporary, targeted package can provide relief without committing the government to permanent broad tax rises, but it should be judged against independent forecasts and implementation details.
Values Fiscal credibility, proportionality and evidence-based policy.
Consequences The main risk is that temporary measures become permanent or that the distributional effects differ from the government’s intentions.
Right
Arguments Higher taxes on banks, property and savings may discourage investment, increase costs for tenants and reduce the competitiveness of UK financial services.
Values Low taxation, enterprise, property rights and market incentives.
Consequences Critics fear weaker investment and higher prices could offset part of the household support.
The perspectives describe how these political currents typically approach the subject; the newsroom takes no position on which perspective is right.
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The central measures are directly supported by the published Budget. Possible effects on investment, rents and saving are presented as arguments or uncertainties, not facts.
- confirmed The bank corporation tax surcharge will rise from 3% to 6% for 15 months. — Stated in the Budget document. source
- confirmed The Household Energy Payment is worth £100 for eligible households. — Stated by HM Treasury. source
- confirmed The cash ISA allowance will remain at £20,000. — Stated in the Chancellor’s speech. source
Editor's note
The tax rates, dates and payment scheme come from the Treasury. Longer-term effects on investment, rents and saving remain forecasts rather than established facts.Sources
- Budget 2026 — HM Treasury
- Budget 2026 speech — HM Treasury
- Budget 2026: Breathing space for today, hope for the future — HM Treasury
More on this in other media
- The Independent — „budget banks”
- BBC News — „budget banks”
- The Guardian — „budget banks”