UK Budget doubles bank surcharge to 6% for 15 months; OBR puts headroom at GBP 15bn

UK banks will pay a 6% surcharge on profits above a GBP 100m allowance for 15 months under the Budget that Chancellor John Healey began presenting to MPs at 12:32 UK time (13:32 CET) on 28 October 2026. The rate, now 3%, rises on 1 January 2027 and returns to 3% from 1 April 2028, according to HM Revenue and Customs. The government says the money will help fund energy support, including a GBP 2.6bn Household Energy Payment: from January 2027, up to 20 million English households in council tax bands A to D get GBP 100 each, and the total also covers funding for the devolved governments.

Healey told MPs that "...banks will pay an extra 3% on the bank surcharge. This will be time limited to pay for immediate support on energy bills, starting in January and ending 15 months later." The Office for Budget Responsibility, whose Economic and Fiscal Outlook went online at 14:00 UK time (15:00 CET) the same day, estimates the rise will bring in GBP 1.5bn across the 15-month period. That total deducts an estimated GBP 190m of lost receipts, because the OBR assumes some banks will move profits out of the UK; it says the size of that effect is uncertain.

Budget 2025 had already set a 2-point rise in income tax on savings and property income for April 2027. This Budget adds another 2 points from the same date, taking the basic, higher and additional rates to 24%, 44% and 49%, the OBR said. It expects the extra rises to yield GBP 0.6bn a year on savings and GBP 0.4bn a year on property income, on average from 2028-29. Healey said the cash ISA limit stays at GBP 20,000 a year.

In its central forecast, the OBR links its higher inflation forecast to the jump in energy prices since its March 2026 forecast: CPI inflation of 3.4% in 2027, against 2% expected in March, falling back to 2% by 2028 if energy prices then decline as market pricing implies. The direct effect of policy decisions since March, including this Budget, adds GBP 8bn to borrowing in 2026-27, it said. It puts the margin by which the current budget meets the fiscal mandate, a surplus in 2029-30, at GBP 15bn, GBP 7bn less than at the last formal assessment at Budget 2025, with a 56% chance of meeting it.

The OBR called its margins against the fiscal targets very small next to the uncertainty in any medium-term forecast. The Commons is due to vote on the Budget resolutions when the debate ends on Tuesday 3 November 2026.