Stages of tax grief: Is it time for bankers to bargain?
Banks are in the firing line at the Budget and in a meeting with bosses on Tuesday chancellor John Healey played coy on any increased rates. In this week’s column Samuel Norman looks at what trade-off could be made. Also on the cards, fresh data shows fintechs are lurching ahead of the incumbents on customer [...]
The Budget is prompting banks to consider potential tax reforms, with bankers and regulators holding differing views on the matter. Samuel Norman explores the trade-offs that could be made to generate revenue for the government while maintaining the banks' financial stability. One potential solution suggested by Jefferies is for banks to temporarily forgo their deferred tax asset (DTA) privileges for five years, in exchange for a two percent annual fee and a government guarantee on those assets if a bank fails.
The shakeup would hit Lloyds with a one percent pre-tax profit downgrade, but would unlock a massive boost to its CET1 ratio and free up billions in capital, expanding the lending power of the banks. Such a move would provide a major relief for investors, and could be framed as a windfall tax to satisfy the Labour left. The Chancellor, John Healey, remains tight-lipped about any tax hikes but warns that the fiscal situation in the UK is "challenging".
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