Increase in rate of banking surcharge for temporary period
Published 28 October 2026
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This publication is available at https://www.gov.uk/government/publications/increase-in-the-banking-surcharge-rate-for-a-temporary-period/increase-in-rate-of-banking-surcharge-for-temporary-period
Who is likely to be affected
Banking companies (including building societies) within the charge to UK Corporation Tax (CT).
General description of the measure
The Corporation Tax surcharge on banking companies (surcharge) is a charge on the profits of banking companies, payable in addition to CT, and the surcharge rate is currently set at 3%. The surcharge is charged on any surcharge profits that exceed an allowance of £100 million. Surcharge profits are calculated on the same basis as for CT, but with some reliefs denied. For groups with more than one banking company the allowance of £100 million can be assigned to the banking companies within the group.
This measure temporarily increases the surcharge rate, setting it at 6% from 1 January 2027 for a period of 15 months, returning to 3% from 1 April 2028.
Policy objective
This measure temporarily sets the surcharge rate at 6%. This will help support the government’s commitment to fiscal sustainability and provide the resources needed to ease pressures on working people and families.
The government recognises the important role that banks play in supporting households, businesses and economic growth across the UK, and remains committed to supporting a thriving and competitive banking sector. The time-limited nature of this measure reflects that commitment, raising revenue to help meet current fiscal challenges while minimising impacts on the UK’s competitiveness and growth in the real economy.
Background to the measure
This measure was announced at Budget 2026.
The surcharge was introduced from 1 January 2016, with the rate set at 8% and the allowance at £25 million.
The surcharge rate and allowance were amended from 1 April 2023, alongside the increase in the main rate of CT from 19% to 25%. The surcharge rate was reduced to 3% and the allowance was increased to £100 million.
Detailed proposal
Operative date
The amendment to increase the surcharge rate will have effect from 1 January 2027 and will apply for a period of 15 months. Where a company’s accounting period straddles 1 January 2027, the period will be split, so that the 6% surcharge rate applies to the notional period commencing on 1 January 2027. Where a company’s accounting period straddles 1 April 2028, the period will be split, so that the 6% surcharge rate applies to the notional period ending on 31 March 2028.
Current law
Current law is included in Chapter 4 of Part 7A of the Corporation Tax Act 2010 (CTA 2010), with the rate set at section 269DA of CTA 2010, and the rules for the allowance between sections 269DE and 269DK CTA 2010.
Controlled Foreign Companies (CFC) rules
The CFC rules are included in Part 9A of the Taxation (International and Other Provisions) Act 2010 (TIOPA). Specific provisions for the calculation of a CFC charge on a banking company are contained in section 371BI TIOPA.
Proposed revisions
Legislation will be introduced in Finance Bill 2026-27 to temporarily amend Chapter 4 of Part 7A CTA 2010. From 1 January 2027, the surcharge rate will be 6%. From 1 April 2028, the surcharge rate will return to 3%.
Where a company’s accounting period straddles 1 January 2027 or 1 April 2028, the period will be split.
Supplementary CFC charge
The CFC charge for a banking company is calculated on its share of the CFC’s chargeable profits. It is charged on a banking company at a rate equivalent to the total of the UK main rate of CT and the rate for the surcharge on its share of the CFC’s chargeable profits in excess of the allowance.
The amendment to the surcharge will apply to the CFC charge for banking companies from 1 January 2027 to 31 March 2028. Where a company’s accounting period straddles 1 January 2027 or 1 April 2028, the period will be split.
Summary of impacts
Exchequer impact (£million)
| 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 | 2030 to 2031 | 2031 to 2032 |
|---|---|---|---|---|---|
| +305 | +950 | +220 | 0 | 0 | 0 |
These figures are set out in Table 6.1 of Budget 2026 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Budget 2026.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
There is no impact on individuals as this measure only affects banking companies.
This measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
This measure does not affect individuals, therefore it is not anticipated that there will be disproportionate impacts on any protected groups.
Administrative impact on business including civil society organisations
This measure is expected to have a negligible administrative impact on approximately 65 banking groups affected by the surcharge.
One-off costs will include familiarisation with the change and pro-rating the surcharge rates and allowance for each notional period, and could involve updating systems and software to reflect the new rate. This measure is not expected to increase ongoing costs for businesses.
Customer experience is expected to remain broadly the same as this measure does not alter how banking companies interact with HMRC.
This measure is not expected to impact civil society organisations.
Operational impact (£million) (HMRC or other)
There are no financial consequences for HMRC.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be monitored through information collected from tax returns and through communication with affected taxpayer groups.
Further advice
If you have any questions about this change, contact the Financial Services Policy Team by email financialservicesbai@hmrc.gov.uk.