Lloyds warns UK's banking sector needs 'competitive and stable' tax regime ahead of Budget

Lloyds has issued a warning that the banking sector requires a "competitive, stable" tax regime to spur investment in the UK, amidconcerns that bank taxes might rise in the forthcoming Budg et.

Finance chief William Chalmers expressed the bank's desire for a that supports 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 stated.

"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 also mentioned that Lloyds, which owns Halifax and is the nation’s biggest mortgage lender, is eager for "clarity" from the imminent autumn Budget. These comments hint that any hike in tax rates for banks could affect the UK's standing as a financial hub.

They also reflect Lloyds’ endorsement of the Government’s strategy to enhance economic growth in the UK, with Mr Chalmers noting that the bank anticipates measures that can drive investment. He further noted that the lender would welcome "a Budget that looks toward creating an environment that is conducive to, and incentivises, long-term investment" in sectors like housing, infrastructure, and energy transition.

A new analysis by PwC for trade group UK Finance revealed on Monday 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.

With the UK Government set to announce its Budget statement next week, speculation is rife about potential tax increases to address shortfalls in public finances. The finance chief at Lloyds presented these expectations alongside the bank's third-quarter results, which showed a pre-tax profit of £1.8bn between July and September.

This figure is 2% lower than the £1.9bn generated during the same period last year, but it significantly exceeded forecasts, with analysts predicting a profit of around £1.6bn for the third quarter. In other news, Lloyds reported that its customers are showing increasing financial confidence as cost-of-living pressures continue to ease.

The bank noted a 5% increase in spending on non-essential items among its customers over the first nine months of the year, while average spending on fell nearly 20%.