Call for banks to chip in and protect UK from “Trumpflation”

The Trades Union Congress (TUC) has renewed its calls for an increase in the bank surcharge tax. This comes as UK households and firms face the effects of “Trumpflation”.

The bank surcharge is an additional 3% corporation tax on the profits of banking companies exceeding £100m. In April 2023 the Conservatives reduced it to this level from 8%.

With Donald Trump’s illegal war unleashing economic chaos, the union body says it’s vital that banks play their part in any efforts to protect the economy by paying their fair share in tax.

The longer the war goes on, the more likely support for households and industry will be necessary. And that will require funding.

The TUC says working people are facing the impact of the Trump-made cost of living crisis. And it urges the government to pull out all the stops to protect households and firms.

The union body adds that banks must play their part in rebuilding Britain and funding our public services like schools, hospitals and local councils.

City of London fat cats

The call comes as analysis reveals City bonuses have reached record levels as banks continue to enjoy sky high profits.

In 2025 the average bonus in the finance and insurance sector was £20,300 – the first time it has topped £20,000. City bonuses grew 6.3% in 2025, which represented the highest growth for three years.

For the economy as a whole, total bonuses in the City amounted to £23.6bn in 2025. Again, this is the highest figure on record.

Using the latest HMRC corporation tax receipt figures, the TUC estimates bank profits were £35.2bn in 2024-25. Over the last three years profits have averaged £36.5bn. This is 57% higher than the average of profits in the three years ahead of the global financial crisis (£23.2bn).

Time for action on banks

The TUC is calling for an increase in the bank surcharge, which it says could raise significant funds over the coming years. Particularly given the scale of banks’ current windfalls,

Bank profits have been turbocharged by the removal of the bank surcharge. And this has come just as high interest rates meant excess profits for banks. Together, this has led to higher returns both from net interest (the difference on interest charged to borrowers and paid to savers) and interest paid to banks on reserves they hold at the Bank of England.

As a result, bank profits are now much higher than they were in the period before the financial crisis. But after the pandemic, the Conservatives slashed taxes on banks.

TUC analysis reveals an increase in the bank surcharge could raise between £23bn-55bn over the next four years:

• A 16% surcharge, which is doubling what it originally was before the Conservatives cut it, would deliver £23bn.
• A 35% surcharge, which would be the same level as the windfall tax the Conservatives imposed on energy companies, would deliver £55bn.
• Even just reversing the Tory cuts and setting it at 8% – which the TUC says is the “bare minimum” – would raise £9bn over the next four years.

The union body also warns that if interest rates remain higher for longer, banks will make even more money.

Public support

Recent TUC polling shows significant support for a windfall tax on banks, with two in three (66%) backing this approach. This rises to 83% among Conservative to Labour switchers in the 2024 general election and 73% among Labour voters from the 2024 election now leaning to Reform.

The TUC is also calling for the government to reinstate the cap on banker bonuses to curb excessive pay for senior City executives while the rest of the country struggles with a continued cost of living crisis.

The EU still has a bonus cap, which seeks to reduce excessive risk taking (of the sort that led to the last financial crisis) and align pay with long-term stability not short-term gains.

TUC General Secretary Paul Nowak said:

Donald Trump’s illegal war abroad risks unleashing economic chaos at home.

It’s absolutely right that the government does everything it can to protect British households and firms from Trumpflation.

The longer this war goes on, the more likely the government will need to step in with increased support.

That’s why it’s now more vital than ever that banks pay their fair share in tax. Getting banks to contribute more is just common sense.

After the Tories slashed the bank surcharge, high interest rates created a profits bonanza for banks. And if rates remain higher for longer, banks are set to cash in even more.

Instead of lining their own pockets with eyewatering bonuses, it’s only right that banks’ bumper profits are taxed fairly to invest in our hospitals, schools and local councils.

Featured image via the Canary