Lloyds Banking Group chief financial officer William Chalmers criticised the government for linking a higher bank tax to support for energy bills. He spoke on an earnings call on Thursday, the day of the group’s third-quarter results and a day after Chancellor John Healey announced the bank surcharge would double from 3% to 6% from January. The increase is levied on top of corporation tax.
Chalmers said he did not see an obvious connection between energy prices and bank taxes. The surcharge is meant to last 15 months to pay for immediate support on energy bills. He said Lloyds hoped the increase would be temporary and that the rate would be limited.
Concern over tax stability
Chalmers said the UK banking sector needed to be able to deliver services to businesses, households and communities at a reasonable cost, in order to support growth. He said Lloyds was a major taxpayer and needed a stable and predictable tax regime.
The Treasury has promised to write the 15-month limit into the financial bill. Senior bankers privately doubt the limit would hold if another energy crisis occurs. Spain offers a precedent: its two-year windfall tax from 2022 was extended by three years and raised from 4.8% to 7% for the largest banks.
Profits and taxes at Lloyds
Lloyds has paid 1.8 billion pounds in corporate taxes so far this year. Its third-quarter pre-tax profit rose to 2.3 billion pounds from 1.2 billion pounds a year earlier. Net interest income rose 10%, as higher fuel prices linked to the Middle East war pushed up interest rates across the industry.
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Last year Lloyds took an 800 million pound hit for the motor finance scandal, and it has set aside another 800 million pounds for compensation.
Source: Lloyds Banking Group
