- Britain’s four biggest banks have made around £200bn in pre-tax profits over the past five years.
- Jamie Dimon has warned that higher taxes could put UK jobs and investment at risk.
- Banks already face a 28 per cent corporation tax rate plus a separate surcharge, while unions are calling for further levies.
Britain is facing a familiar political dilemma: banks are making billions in profits at a time when households are under pressure, but taxing them further could risk making the country less attractive to financial firms and investors.
That debate moved up a level this week after JPMorgan chief executive Jamie Dimon met Prime Minister Andy Burnham and Chancellor John Healey and reportedly warned against higher taxes on the banking sector.
The meeting came ahead of the government’s October 28 Budget, with speculation that Healey is considering a windfall tax on banks and oil companies.
Dimon is understood to have warned that higher taxes could put employment and investment in Britain at risk. He has made similar arguments before, including in an August telephone conversation with Healey.
The JPMorgan boss has previously warned of 'adverse consequences' from further increases in bank taxes.
The argument is particularly significant because JPMorgan is one of the biggest foreign financial institutions operating in Britain, employing around 23,000 people in the country.
Britain already taxes banks more heavily
The case for another levy rests partly on the scale of the banking sector’s recent profits.
HSBC, NatWest, Barclays and Lloyds Banking Group have generated around £200bn in pre-tax profits over the past five years, helped by the higher interest rates that followed the inflation shock.
UK banks also paid an estimated £43.3bn in tax in the financial year ending March 2025, according to figures commissioned by industry body UK Finance.
The government already applies a higher corporation tax rate to banks than to most other companies. Lenders pay 28 per cent corporation tax, compared with the standard 25 per cent rate, alongside a separate bank surcharge linked to their UK balance sheets.
That has not stopped calls for further taxation.
The Trades Union Congress and campaign group Positive Money have argued that banks could face higher levies, with the additional revenue used to help households dealing with rising energy costs.
Their argument is that the banking sector has benefited significantly from the higher interest-rate environment while many households have faced increased borrowing and living costs.
The government has not confirmed whether a windfall tax on banks will appear in the October Budget.
Dimon has more than taxes at stake
Dimon’s opposition is not new.
The JPMorgan chief has repeatedly warned that Britain needs to remain competitive with other financial centres. In August, he cited falling finance employment in New York, which he attributed to the city's tax regime, as an example of what could happen when financial firms face higher costs.
His warnings also carry a particularly tangible consequence in London.
JPMorgan has plans for a new £3bn headquarters at Canary Wharf, a 3m sq ft tower expected to house more than half of the bank’s UK workforce.
Dimon previously gave the green light to the project after saying he wanted to see a “continuing positive business environment in the UK”. But in May, he warned that JPMorgan could reconsider the investment if Keir Starmer were replaced by a Labour prime minister hostile to banks.
That does not mean a higher bank tax would automatically cause JPMorgan to abandon London. Nor has the bank said that the current proposals would trigger such a decision.
It does, however, illustrate the wider argument facing the government.
For ministers, banks represent a large and profitable tax base at a time when public finances and household budgets are under pressure.
For the banking industry, the calculation is different. Higher taxes can increase the cost of operating in Britain and potentially influence where banks choose to expand, hire and invest.
The question for Healey is therefore not simply how much additional tax banks could pay.
It is whether the government can raise more money from an exceptionally profitable sector without weakening the investment, employment and financial activity that make Britain valuable to that same sector in the first place.
