UK Chancellor John Healey Weighs Windfall Taxes on Banks and Oil Firms to Close £4.7 Billion Budget Gap

British Chancellor John Healey is weighing windfall taxes on banks and oil and gas companies as he prepares his first Autumn Budget, scheduled for October 28, 2026. The goal is closing a £4.7 billion shortfall in public finances while avoiding direct tax hikes on individual taxpayers, according to upday.

Treasury officials are discussing the options with Prime Minister Andy Burnham, upday reported. On the table: increasing the existing windfall levy on oil and gas profits, extending it past its current 2030 expiration, and imposing a time-limited tax on bank profits modeled on the energy levy, according to The Independent, which cited reporting from The Telegraph.

The Existing Levy Already Bites

Britain already taxes oil and gas profits at 78 percent under a windfall levy that former Chancellor Rachel Reeves extended from 2028 to 2030, according to Yahoo Finance. Banks currently pay a 3 percent surcharge on top of the standard 25 percent corporation tax rate, bringing their effective rate to 28 percent, the Express reported.

The Trades Union Congress wants Healey to go further, pushing for a 16 percent bank surcharge it says would raise £24 billion over four years, or a 35 percent windfall tax it claims could bring in £60 billion, according to the Express. Either proposal would push total bank taxation to 41 percent or 60 percent.

Green Party leader Zack Polanski has floated his own plan: a 38 percent levy on bank profits above £800 million, which he says, citing analysis from campaign group Positive Money, would raise £19 billion for small businesses, The Independent reported.

Bank Bosses Push Back Directly

JPMorgan CEO Jamie Dimon personally warned Healey against a bank windfall tax, arguing it could push jobs out of the UK and drawing a comparison to New York, according to The Independent. Citigroup CEO Jane Fraser separately advised against a new banking tax, upday reported, and the industry group UK Finance has raised similar concerns with the Chancellor directly.

Barclays posted a £3.3 billion quarterly profit and HSBC reported £10.1 billion in profit, the Express noted, framing both banks as flush with cash Healey wants a bigger cut of.

North Sea Industry Warns of "Lasting Damage"

The energy sector's pushback has been just as blunt. Russell Borthwick, chief executive of the Aberdeen Chamber of Commerce, which represents BP and Shell locally, told Healey directly that another tax raid "risks doing lasting damage to an industry which Britain cannot afford to lose," according to Yahoo Finance. He said the sector is "already losing highly skilled jobs" and watching investment leave the country.

Enrique Cornejo, policy director at trade body Offshore Energies UK, warned that further fiscal changes would "severely undermine investor confidence and energy security, accelerate job losses and create a damaging cliff edge for domestic production," Yahoo Finance reported.

Scottish First Minister John Swinney has gone the opposite direction from the TUC and Greens, urging Burnham to scrap the existing 38 percent oil tax entirely after BP announced it would sell its North Sea operations, according to both upday and The Independent.

The Case for a Windfall Tax

Proponents argue the profits at issue are not the product of skill or investment but of external shocks. BP's profits more than doubled between April and June following the US-Iran war, which sent oil prices soaring, The Independent reported. The TUC and Greens argue taxing that windfall is fairer than raising taxes on working people, and a Treasury spokesperson told The Telegraph that Healey "is fully focused on his priorities, which will boost business, help with the cost of living and support people in every postcode," while declining to comment on specific proposals.

Burnham has already committed to between £46 billion and £63 billion in new spending by the end of the decade, according to estimates from Capital Economics cited by the Express, on top of a needed £4.7 billion for defense. Labour's broader spending plans for this parliament total an estimated £650 billion, which the Express says would lift the national debt from £3 trillion to £3.5 trillion.

Two licensing decisions loom over the debate: the Jackdaw gas field and the Rosebank field west of Shetland, which together could boost UK gas production by nearly 10 percent, Yahoo Finance reported. Energy Secretary Miatta Fahnbulleh, who succeeded Ed Miliband, will decide whether to approve them. Whether Healey signals a harsher tax regime before that decision, or after, will likely shape how much new North Sea investment actually materializes.