UK Treasury Weighs Windfall Taxes on Banks and Oil Firms, Reports Say

August 31, 2026 at 07:00 PM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

Chancellor John Healey has received a plan to impose windfall taxes on banks and oil companies ahead of the 28 October Budget, according to reports. The proposal aims to rebuild a fiscal buffer that may have shrunk to £8bn and fund £4.7bn in defence spending. Industry leaders have warned against new levies, even as public sector pay deals add pressure to public finances.

Key Facts

Chancellor John Healey has been presented with a plan to tax oil firms and banks further, according to reports.
The Resolution Foundation estimates the fiscal buffer could be as low as £8bn, down from £22.7bn.
Healey must find £4.7bn in extra revenue over four years for defence investment and £10bn in departmental cuts.
Citigroup CEO Dame Jane Fraser warned Healey against a new banking tax, while UK Finance wrote to the Chancellor about risks to financial services.
Andy Burnham agreed to give Avanti train drivers a pay rise of around 3.6%, with LNER drivers potentially receiving 12% over four years.

Windfall Tax Proposal

Treasury officials view windfall taxes on banks and oil companies as 'low hanging fruit' for raising government receipts, according to Bloomberg. The plan was presented to Chancellor John Healey as bosses in both sectors posted huge profits. Healey may use this year's Budget to rebuild a fiscal buffer that has partly eroded from £22.7bn. The Resolution Foundation believes the buffer could be as low as £8bn, leaving public finances exposed to energy price shocks.

Industry Opposition

Citigroup boss Dame Jane Fraser warned Healey against a new banking tax. Industry officials at UK Finance wrote to the Chancellor to warn of the risks of hitting the financial services sector. The mooted plan could put City bosses on edge during the two-month run of lobbying ahead of the Budget.

Public Sector Pay Pressures

Andy Burnham agreed to give Avanti train drivers a pay rise of around 3.6%, according to The Sunday Times. The Aslef union, representing some drivers on over £70,000 a year, secured the deal to prevent disruption on the London-Manchester line. Drivers on LNER could receive a 12% pay rise over four years, reports suggested. The squeeze on public finances could limit freedom for Healey and Burnham to provide 'breathing space' to households and businesses.