Chancellor John Healey is reportedly considering windfall taxes on banks and oil companies as Treasury officials look for ways to plug an estimated £4.7bn gap in the public finances ahead of his first Budget.
The options are said to be under discussion as Healey seeks to avoid direct tax rises on households while restoring fiscal headroom damaged by higher borrowing costs and weaker economic assumptions.
No new windfall tax has yet been announced. The proposals remain under consideration and would have to be confirmed by the Chancellor at a fiscal event.
Banks and oil companies in Treasury sights
According to reports, Treasury officials are assessing both a windfall tax on banks and further changes to the tax regime facing oil and gas companies.
A bank levy could be designed as a temporary charge on unusually high profits, while the oil and gas option could involve increasing or extending the existing Energy Profits Levy.
The Government is reportedly examining the measures as part of efforts to fill a £4.7bn fiscal gap without placing the main burden on individual taxpayers.
Healey under pressure ahead of first Budget
Healey is due to deliver his first Budget on 28 October.
He is understood to want the event to be relatively restrained compared with the tax increases introduced under his predecessor Rachel Reeves, while still raising enough money to meet the Government's spending commitments and fiscal rules.
The Treasury has not confirmed either windfall tax proposal and has maintained the standard position that tax decisions are matters for the Chancellor at fiscal events.
JP Morgan boss warned against bank tax rise
The possibility of a fresh tax on banks comes despite a direct warning from JP Morgan chief executive Jamie Dimon earlier this month.
Dimon urged Healey not to increase taxes on the banking sector, warning that higher charges could undermine the competitiveness of the City of London and encourage financial firms to move jobs elsewhere.
The debate has intensified after strong profits across Britain's major lenders. Campaigners and trade unions have argued that the sector could absorb a temporary levy and that the proceeds could be used to support households facing higher living costs.
North Sea row could deepen
Any move to increase or extend the oil and gas windfall tax would also intensify political tensions over the future of the North Sea.
The existing Energy Profits Levy was introduced in response to exceptional profits generated by the energy-price shock and is currently due to end in March 2030.
Scottish political leaders and the offshore industry have repeatedly warned that extending or increasing the levy could weaken investment and accelerate job losses in the North Sea.
Supporters of the tax argue that producers should make a larger contribution when global events generate unusually high profits.
£4.7bn hole adds to wider fiscal pressure
The reported £4.7bn gap comes as the Government faces a series of competing financial pressures.
Higher gilt yields have increased the cost of servicing government debt, while weaker economic and migration forecasts could further reduce the Chancellor's room for manoeuvre.
Separate analysis reported by the Financial Times has warned that lower immigration assumptions could reduce Healey's fiscal headroom by around £4bn because of the effect on the size of the workforce, economic growth and tax receipts.
Official borrowing figures have also underlined the challenge, with the public finances recording an unexpected £1.8bn deficit in July.
Corporate taxes could help shield households
Politically, the attraction of targeting banks and oil companies is clear.
Both sectors have recorded periods of exceptionally strong profitability, and raising revenue from companies would allow Healey to argue that he is protecting household incomes while asking profitable businesses to make a larger contribution.
But both options carry economic risks. Banks argue that further taxation could weaken London's competitiveness, while oil and gas companies say higher North Sea taxes could reduce investment and domestic energy production.
Nothing decided yet
The key distinction is that these proposals are currently Budget options rather than confirmed Government policy.
The Treasury is reported to be examining them, but Healey has not announced a bank windfall tax, nor has he confirmed any increase or extension to the Energy Profits Levy.
The final package will depend on the fiscal forecasts available to the Chancellor and the choices made ahead of the 28 October Budget.
Sources
- The Independent: Healey considers windfall tax on banks and oil companies — 29 August 2026
- LBC: Chancellor mulls windfall tax on banks and oil companies — 29 August 2026
- The Guardian: Jamie Dimon warns Healey against higher bank taxes — 17 August 2026
- Financial Times: Lower immigration forecasts could hit Healey's fiscal headroom — 28 August 2026
- The Guardian: UK records unexpected July deficit — 21 August 2026