Britain to lower banks profit surcharge to 3% from April 2023

FILE PHOTO: The City of London financial district is seen in London, Britain, October 22, 2021. REUTERS/Hannah McKay

LONDON (Reuters) – Britain will lower its surcharge on banking profits from April 2023, the finance ministry said on Wednesday, as the government seeks to shore up London’s competitiveness as a global financial centre after Brexit.

British Finance Minister Rishi Sunak said in his budget statement that the current 8% surcharge on profits over 25 million pounds at banks will be cut to 3% from April 2023, softening the impact of a rise in UK corporation tax on that date from 19% to 25%.

“The overall rate of corporation tax on banks will in 2023 increase from 27% to 28%, and will remain higher than the rates paid by other companies,” Sunak told parliament.

Britain is looking for ways to maintain London’s role as a global financial centre after being largely cut off from the European Union since Brexit. Without a cut in the surcharge, UK lenders’ overall tax bill would put them at a disadvantage to their international peers.

“Small challenger banks are improving banking competition which is good for the sector and good for consumers, so to help them I will also raise the annual allowance to 100 million pounds,” Sunak said in reference to the current 25 million pound threshold.

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