UK plans to raise bank-profit tax surcharge from 3% to 8%, hitting shares of Lloyds and NatWest.

The UK government is expected to increase the bank-profit surcharge from 3% to 8% in Finance Minister John Healey's upcoming budget, causing shares of Lloyds and NatWest to fall. This tax hike could reduce earnings for UK-focused banks by about 6% and raises concerns about London's tax competitiveness compared to other financial centers. While the surcharge aims to generate an additional £2 billion annually for the Treasury, some industry leaders warn it may discourage investment in the UK financial sector. Analysts expect mixed third-quarter results for banks, with the tax change likely overshadowing earnings but potentially resolving some market uncertainty.

Lloyds Banking Group holds a market cap of $80.29 billion and offers a dividend yield of 3.99%, while NatWest Group's market cap stands at $70.61 billion with a 5.4% dividend yield. Despite the article's concerns about a potential bank-profit surcharge hike, shares of Lloyds and NatWest are up slightly on Pluang, with Lloyds rising 0.18% and NatWest 0.46% as of Oct 16, 2026 18:11 WIB. Trading volumes are robust, particularly for Lloyds at nearly 38 million shares, indicating active investor interest.