When the general public are struggling to purchase the essentials and public services are facing more cuts, it is hard to argue against windfall taxes on banks.
Considering it is taxpayers that bailed the banks out following their own mistakes in 2008, we should now use this as an opportunity to ask them to repay that debt. This would also assist a number of smaller businesses that are currently struggling with increasing overheads and Covid-19 loan repayments.
Just like oil and gas companies, banks have seen increased profits due to the cost-of-living crisis and current market conditions. The big five banks have all recorded record profits, their highest since the 2008 financial crash.
However, it is worth noting that currently banks are paying a higher combined rate of corporation tax than most other companies. This will still be the case even following the reduction in the bank tax surcharge from 8% to 3% which comes into effect in April. Paired with the rise in corporation tax to 25% (also in April), banks will still be paying more than other companies albeit only 1% more rather than the 6% more they would have paid had the surcharge remained at 8%.
Given that the UK still needs to remain a competitive economy, any windfall tax should have a sunset clause that ensures the tax falls away after 3 years. Hopefully by then we will have ridden out the current volatile economic conditions.
Find out more
For further guidance on any of the tax measures discussed in this article, please contact your usual MHA advisor or Contact Us.
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