October 28 2026
Chancellor John Healey has spared Britain’s banks the 8% hammer blow they feared, yet his smaller, temporary tax rise will still find its way into the mortgages, savings and pensions of millions, warns the CEO of deVere Group, one of the world’s largest independent financial advisory organisations.
The comments from Nigel Green come as Healey uses his first Budget to add 3% to the bank surcharge from January, doubling it to 6% for 15 months.
He says: “Credit where it’s due, the Chancellor blinked. He was under enormous pressure to go to 8% and leave it there for good, and he didn’t.
“The sector will take this one on the chin.
“But a smaller tax is still a tax, and banks don’t pay it out of thin air. Every pound the Treasury takes is a pound that can’t be lent to a young couple buying their first home or a small firm trying to expand.”
The increase lifts the combined tax rate on UK banking profits above £100m to 31%, with a separate levy on balance sheets charged on top. It lands on an industry whose tax bill already climbed 8.5% to £39.1bn last year.
Supporters of the move point to the roughly £15bn the biggest lenders made in the first half of 2026, much of it from the wide gap between what they charge borrowers and what they pay savers.
Nigel Green says: “Those profits ride the interest rate cycle. When rates fall, margins will follow.
“A tax justified by one strong year still has to be paid in the weaker ones, and that’s when it starts to bite on lending.”
Bank shares spent much of October sliding as talk of a raid grew, then bounced on reports the rise would be smaller and temporary. Investors, it seems, had feared something much worse.
The deVere CEO says the people who feel it first won’t be in the City.
“It shows up quietly, in a remortgage quote that’s dearer than it might have been, or a savings rate that never quite catches up. It shows up in the pension funds and ISAs that own bank shares and depend on their dividends.
“Nobody gets a letter saying the Budget did it.”
Healey says he celebrates and is grateful for the role banks play in the economy.
Nigel Green says: “You can’t thank the banks for holding the economy together and reach into their pockets in the same speech. Gratitude doesn’t normally arrive with a bigger tax bill.”
He believes the promised end date is now crucial.
“The test for this Chancellor arrives in spring 2028, when the surcharge is meant to fall away. If it goes on time, Britain tells every bank deciding where to grow that this is a country which keeps its word. If it gets extended, nobody will believe the next promise.
“Global banks don’t need much excuse to book business elsewhere.
“Financial centres from the Gulf to Asia are chasing the people and capital London spent decades attracting, and they’ll happily hold up today as proof Britain changes the rules whenever money gets tight.”
Nigel Green warns the timing could hardly be worse for Britain’s ambitions in finance.
“The industry is heading into a period of enormous change, with AI reshaping lending and tokenisation set to transform how assets are bought and sold. The countries that lead it will be those where banks feel confident enough to invest heavily now.
“A surcharge with a firm end date might be survivable. One that keeps coming back would leave London watching from the sidelines.”
He concludes: “Healey spared the City the worst. Households and businesses won’t be so lucky.
“They’ll be paying for this through their mortgages, their savings, and their pensions long after the relief in the banks has faded.”
