The chancellor has decided against increasing taxes on banks in this month\u2019s budget, according to reports, which sent UK bank shares higher on Thursday.<\/p>\n
Shares in the high street banks NatWest<\/a> and Lloyds rose by about 2%, putting them among the top risers on London\u2019s FTSE 100.<\/p>\n Despite speculation in the run-up to the 26 November budget, Rachel Reeves<\/a> has reportedly told colleagues that she does not intend to impose further taxes on the UK banking sector, as she wants it to remain competitive to help support economic growth, according to the Financial Times.<\/p>\n Banks currently pay a corporation tax rate of 28%, which includes a 3% surcharge on top of the standard corporation tax rate of 25%.<\/p>\n Fresh calls for a new tax raid on lenders<\/a> were raised in August in a paper by the Institute for Public Policy Research thinktank, which calculated such a move could raise as much as \u00a38bn.<\/p>\n The report called on Reeves to levy a new tax on the big banks to help to recover the \u201cwindfalls\u201d they received as a result of the emergency economic policy known as quantitative easing, which was implemented by the Bank of England after the 2008 financial crisis.<\/p>\n A bank levy has been one of a number of potential tax increases<\/a> \u2013 including on property and landlords\u2019 rental income<\/a> \u2013 discussed in recent weeks, as Reeves seeks to plug a shortfall in the public finances.<\/p>\n Ministers had previously asked Treasury officials to look into the profitability of the UK\u2019s largest banks as a consequence of quantitative easing, the Guardian understands. Speculation about a windfall tax on large banks spooked investors, triggering a sharp sell-off of banking shares<\/a> and prompting the industry to lobby against higher taxes for the sector.<\/p>\n The banking industry body UK Finance claimed in a report in October<\/a> that the total tax rate paid by UK banks was higher than that of other financial centres, including New York, Dublin, Frankfurt and Amsterdam, driven by changes to employers\u2019 national insurance contributions from this April.<\/p>\n The total tax contribution of the UK banking sector for the most recent financial year was \u00a343.3bn, representing 4.3% of total UK government tax receipts, according to an estimate by PwC. It found the overall tax contribution had risen by a third since PwC\u2019s study began in 2014, when it was \u00a333.4bn.<\/p>\n skip past newsletter promotion<\/a><\/p>\n Sign up to Business Today<\/p>\n Get set for the working day \u2013 we’ll point you to all the business news and analysis you need every morning<\/p>\n Privacy Notice: Newsletters may contain information about charities, online ads, and content funded by outside parties. If you do not have an account, we will create a guest account for you on theguardian.com<\/a> to send you this newsletter. You can complete full registration at any time. For more information about how we use your data see our Privacy Policy<\/a>. We use Google reCaptcha to protect our website and the Google Privacy Policy<\/a> and Terms of Service<\/a> apply.<\/p>\n after newsletter promotion<\/p>\n