UK banking executives anticipate higher taxes in the chancellor's Budget announcement expected within two weeks, according to conversations reported by the BBC.

Senior bankers told the BBC they expect the sector to face new levies. Chancellor John Healey has called banks part of "the crown jewels" of the UK economy but has not ruled out additional taxation. The sector's four largest banks reported combined profits of approximately £15bn in the first half of 2024, prompting calls from unions and others for increased taxes.

The UK Finance trade body countered that "further increases in bank taxes would weaken competitiveness, discourage investment and job creation, and work against the government's ambition to deliver growth in every postcode".

Banks currently face a 3% surcharge on top of the baseline 25% corporation tax rate, plus a levy on balance sheet assets. The sector contributed nearly £40bn to the Treasury last year when employee income tax is included. The bank levy generated £1.4bn in the prior year and the surcharge contributed £1.2bn.

The chancellor has multiple options to increase revenue from banking. He could restore the 3% surcharge to its former 8% level, a move that could raise around £2bn annually. That rate was lowered under former Chancellor Rishi Sunak when he raised corporation tax to 25%. Alternatively, the bank levy, currently set at 0.1% on short-term loans and 0.05% on longer-dated debt, could be increased.

One proposal discussed with Treasury officials involves restricting banks' ability to use past losses to offset current profits. Lloyds particularly benefits from this practice, having offset financial crisis losses for years. A moratorium on this offsetting for several years could generate approximately £1bn annually for the Treasury, according to the BBC report.

Jamie Dimon, chief executive of JP Morgan, warned that the UK already imposes one of the world's highest tax burdens on banks. He cautioned that additional sector-specific taxes could discourage investment and harm competitiveness.

Industry leaders argue that tax increases targeting UK banks while exempting foreign banks' UK operations would contradict the government's stated commitment to supporting British business.