Lloyds finance chief says UK bank sector needs ‘competitive, stable’ tax regime

Lloyds has cautioned that the banking sector needs a “competitive, stable” tax regime to encourage investment in the UK, amid fears that bank taxes could be hiked in the upcoming Budget.

Finance chief William Chalmers said the bank would welcome a Budget that aligns with the Government’s “pro-growth agenda”.

“The bank sector – and certainly we at Lloyds – are one of the UK’s largest taxpayers already, and actually we take some pride in making our contribution to the society of which we are a part,” he said.

“It is also the case that it is important to have a competitive, stable tax regime to encourage the type of investment and lending that we would seek to do to promote the growth agenda.”

He added that Lloyds, which owns Halifax and is the UK’s largest mortgage lender, was looking forward to getting “clarity” from the upcoming autumn Budget.

The remarks suggest that any increase to tax rates for banks could have an impact on how competitive the UK is as a financial centre.

He elaborated that the lender would welcome “a Budget that looks toward creating an environment that is conducive to, and incentivises, long-term investment” in areas such as housing, infrastructure and energy transition.

Analysis by PwC for trade group UK Finance on Monday showed that UK banks paid a record amount in taxes last year, partly due to them generating more taxable profits.

The UK banking sector’s total tax contribution was £44.8 billion for the financial year to the end of March, the new figures showed.

The finance boss laid out Lloyds’ expectations alongside the bank’s third-quarter results, which showed it made a pre-tax profit of £1.8 billion between July and September.

This was 2% lower than the £1.9 billion generated this time last year, but significantly ahead of forecasts with analysts expecting a profit of about £1.6 billion for the third quarter.

Meanwhile, Lloyds said its customers were showing increasing financial confidence as cost-of-living pressures continue to ease.

It revealed a 5% increase in spending on non-essential items among its customers over the first nine months of the year, while average spending on energy bills dropped nearly 20%.