CHALLENGER BANKS URGE HEALEY TO RAISE SURCHARGE THRESHOLD

Revolut, Monzo, Shawbrook, Investec, Aldermore and OSB have written to Chancellor John Healey ahead of the Budget, calling for the threshold at which UK banks face an additional tax surcharge to be raised. The banking surcharge currently stands at three per cent, which takes lenders' overall corporation tax rate to 28 per cent, with profits of up to £100m exempt. The group wants that exemption threshold lifted to £500m. Signatories to the letter, which was first reported by Sky News, include Revolut UK chief executive Francesca Carlesi, Monzo's Diana Layfield, Shawbrook boss Marcelino Castrillo and Paragon chief executive Nigel Terrington.

In the letter, the lenders said they recognised the "fiscal pressures facing the government" but warned that any increase to the surcharge rate would have a "significantly negative and disproportionate impact on mid-tier and specialist banks" and would harm investor sentiment. They argued that the current surcharge design is "disproportionate relative to the systemic risk posed by mid-tier and specialist banks" and said a strong mid-tier and specialist banking sector contributes to UK economic growth. The group said it accounts for 60 per cent of UK lending to small- and medium-sized businesses. Analysis commissioned by the group projects that raising the threshold would cost the Treasury £39m, while keeping surcharge tax revenues "significantly above 2025 levels under all scenarios", according to the letter.

The intervention comes as Healey prepares his Budget and faces pressure to raise revenue for public spending. The letter follows separate lobbying from opponents within the sector who are pushing for banks to be targeted for additional tax at the Budget, according to reporting on the letter. No date has been confirmed for the Budget announcement in the source material.