Revolut and Monzo urge Healey to raise bank tax threshold

Challenger banks Revolut, Monzo, and Shawbrook, along with others such as Investec, Aldemore, and OSB, have urged Chancellor John Healey to raise the threshold for a UK lender to be subject to an additional tax. In a letter to Healey, which was seen by City AM ahead of the Budget, the group expressed concern that any increase in the rate of the sector-specific surcharge would negatively impact mid-tier and specialist banks and harm investor sentiment.

Currently, the UK banking surcharge stands at three percent, raising lenders' overall corporation tax rate to 28 percent. Profits up to £100 million are exempt from the surcharge, but the group is calling for the allowance to be increased to £500 million. The group argues that the current design of the surcharge is disproportionate given the systemic risk posed by mid-tier and specialist banks.

They further stated that a robust mid-tier and specialist banking sector can make a significant contribution to UK economic growth and prosperity. The group's analysis estimates that this change would cost the Treasury £39 million, but surcharge tax revenues would remain "significantly above 2025 levels under all scenarios." The group, which accounts for 60 percent of UK lending to small- and medium-sized businesses, signed the letter, including Revolut UK's chief Francesca Carlesi, Monzo's Diana Layfield, Shawbrook's Marcelino Castrillo, and Paragon's chief executive Nigel Terrington.

The banking industry body UK Finance also wrote to Healey with a warning against any tax rises on the sector, emphasizing the sector's wide-reaching impact on the economy, credit provision to households and SMEs, investment support, and acting as the UK's gateway to global markets.