Should lower-income households receive a portion of bank profits?

In order to pay for a social tariff on energy bills, the TUC is advocating for a higher windfall tax on banks

Calls for an increase in the windfall tax to assist struggling households with their energy bills have been sparked by bank bonuses reaching their highest levels since the 2008 financial crisis.

The Trades Union Congress (TUC) examined bank bonus data and found that bonuses totaling £25 billion were given out in the fiscal year that ended in March 2026, an increase of 16% yearly.

According to the TUC, bank bonuses saw their highest real-terms quarter since 2008 and have never been higher in cash.

The TUC asserts that these numbers indicate there is potential for a higher bank surcharge tax, which could help finance a social tariff that would permanently lower energy bills for the majority of households, ahead of the chancellor's speech at Mansion House this evening.

Watch the entire video here. According to the trade union, "bank bonuses are booming while sky-high bills are looming for ordinary working people," which is more proof that banks could easily afford to pay higher taxes.

What is the tax on bank surcharges?

An extra 3% corporation tax on bank profits exceeding £100 million is known as the bank surcharge tax or windfall tax.

It was lowered from an initial 8% in April 2023 by the Conservative government. It was first introduced in 2016 as part of efforts to redistribute wealth back into the UK economy.

The bank surcharge tax reform.

The surcharge, according to critics, doesn't go far enough, especially since banks have recently profited from raising loan and mortgage interest rates.

"Record bonuses to celebrate record profitsthe cost of living crisis must be something of a fantasy to City bankers," stated Sara Hall, co-executive director of the research organization Positive Money.

"The government must do this in place of banks since they aren't using their windfall profits from higher interest rates to help households or businesses that are having trouble making ends meet."

An increase in the bank surcharge could generate between 9 billion and 60 billion over the next four years, according to TUC analysis.

According to the TUC, merely undoing the Tory cuts and raising it to 8% would generate 9 billion over a four-year period.

Over the course of four years, a 16 percent surcharge would provide 24 billion, doubling the surcharge's prior value prior to the Conservatives' reduction.

In the meantime, 60 billion over four years would be provided by a 35 percent surcharge, which would be equivalent to the windfall tax the Conservatives levied on energy companies.

It follows the big four banks' 45.7 billion in 2025 profits.

Profits are 40% higher than they were prior to the 2008 financial crisis, according to a TUC analysis of the larger banking industry.

According to the trade union, raising the bank surcharge tax could result in a permanent social tariff that would lower energy bills for all people with low and middle incomes by up to £559 annually, as well as additional assistance in the event of a cost spike.

The TUC's general secretary, Paul Nowak, stated: "Bank bonuses are booming while sky-high bills are looming for working people."

"Whenever the topic of taxing banks comes up, some of the nation's wealthiest citizens begin to complain, claiming they are unable to make the additional payments.

However, the nation's mortgage woes and rising interest rates are profitable for the large banks. They are well able to pay higher taxes.

"The argument for raising the bank surcharge tax has never been stronger. The government should use the funds raised to lower people's energy bills because it's a long overdue and sensible solution."

Andy Burnham, the front-runner for prime minister, may have a unique chance to tip the scales in the public's favor, according to Positive Money's Hall.

"He should seize the chance to implement this popular policy that won't cost the government a dime, but might just earn it some desperately needed trust," she stated."

Do banks have a role in financing a social tariff?

Increased bank surcharges may eventually result in lower bonuses.

Although not everyone agrees, the unions might be pleased.

Bank bonuses are a performance tool as well as a City excess, according to Samuel Mather-Holgate, managing director of Mather and Murray Financial.

"Pay has to reward results if banks want to attract people who can grow lending, manage risk, and deliver returns," he stated.

"Doubling down on restrictions would be an odd response because UK banks' profitability and competitiveness have hardly looked world-beating since the bonus cap era. The question of whether banks should contribute more to public coffers is debatable, but reducing bonuses to pay energy bills runs the risk of treating pay policy like a piggy bank.

"A social tariff might be worthwhile, but it requires a stable funding model, not an attack on bank performance-enhancing incentives."

"Energy bills didn't go up because bankers got paid too much," said Anita Wright, a financial advisor at Ribble Wealth Management. They increased because everyone's money was less valuable due to years of cheap money and a declining pound.

"Families are currently being squeezed by the same forces that increased those bank profits."

"People should ask why the pound in their pocket buys less every year if you really want to help people with their bills," Wright said.

"Blaming bankers is easier," she continued. It also doesn't fix anything. Payment is always required. Reducing the tab does not equate to changing who picks it up."