Bank tax raid could hit YOUR savings and mortgage

A tax raid on Britain’s banks at October’s Budget could end up costing ordinary savers and mortgage holders, not just the banks themselves, warns the CEO of one of the world’s largest independent financial advisory organisations.

Nigel Green of deVere Group’s comments come as Chancellor John Healey prepares to deliver his first Budget on October 28, facing a fiscal gap economists estimate at more than £22 billion.

Speculation is mounting that Andy Burnham’s government will raise the surcharge on bank profits, with the Trades Union Congress pushing for an increase from 3% to as high as 35%, a move it claims could raise £60 billion for the Treasury.

He says: “Every time a government talks about taxing banks harder, people assume it only hits shareholders in the City.

“It never stays there. Banks pass costs on, and the people who end up paying are ordinary customers with a mortgage, a savings account, or a current card.”

The deVere CEO warns that households should not assume this is simply a fight between politicians and big finance.

“This isn’t really banks versus government.

“It’s banks working out how to protect their profits, and that usually means quietly adjusting the rates and fees ordinary customers pay.

“A bigger tax bill for a bank rarely comes out of executive pay. It comes out of the products sitting in millions of people’s wallets.”

He points to what history suggests happens when bank taxes rise.

“We’ve seen this pattern before with previous bank levies,” he explains.

“Mortgage rates can creep up slightly, savings rates can stay lower for longer than they should, and free banking perks start disappearing quietly in the small print.

“Typically, none of it gets announced with fanfare. It just shows up gradually on people’s statements.”

Nigel Green highlights Barclays’ latest results as evidence of how strong the sector currently looks from the outside, and why that makes a tax rise politically tempting.

“Barclays just posted a near third jump in quarterly profit,” he says.

“Numbers like that make it easy for politicians to argue banks can afford more tax. What doesn’t get said as often is that banks facing higher costs tend to protect their margins first and their customers second.”

He argues that families and savers should be paying close attention to the Budget build-up rather than waiting for the announcement itself.

“People often only start paying attention once a policy is confirmed, and by then the decisions that affect their money have already been made behind the scenes,” the deVere CEO comments.

“Anyone with savings, a mortgage due for renewal, or investments tied to UK banks should be watching this closely over the coming weeks.”

Nigel Green says the scale of what unions are demanding matters less than what actually gets announced.

“A jump all the way to 35% is extremely unlikely,” he says.

“But even a modest rise, closer to the smaller increase some in government have previously floated, could still filter through to household finances over time. People shouldn’t wait for the biggest possible number to take this seriously.”

He concludes: “If you have savings sitting in an account with a poor rate, or a mortgage coming up for renewal, this is exactly the moment to check you’re getting a fair deal, rather than waiting until after the Budget when banks have already quietly adjusted what they offer.”