UK Chancellor Rachel Reeves has signalled a possible tax raid on banks in the upcoming Budget, according to the Financial Times. The proposal puts UUBS’s London operations among the banking businesses that could face higher UK costs, though the scale and design remain unsettled.
Chancellor Rachel Reeves has signalled that the UK government is considering a tax increase on banks in its upcoming Budget, the Financial Times reported. The report places the measure alongside other developments in its FirstFT newsletter, including an offer related to UBS’s London headquarters.
The signal comes before the Budget, so the policy’s final structure and timing remain open. The immediate change is political rather than a completed tax measure: banks are being warned that the government may seek additional revenue from the sector.
UBS is the named company most directly connected to the corporate angle through its London headquarters. Its latest cited financial figures are older company data, showing $29.2B of revenue and a 3.9% net margin for the year ended December 31, 2017; those figures do not establish the effect of any new UK tax on current results.
The uncertainty is concentrated in the details of the proposal, including which banking activities would be covered and how any charge would be calculated. The report describes a signal ahead of the Budget rather than a final enacted tax rate.
The next decisive event is the UK Budget. The key evidence will be the announced tax mechanism, its effective date and the treatment of UK-based banking operations.
Our take
1 / 7
Our read · Oct 16
Rachel Reeves signalled a possible UK bank tax raid ahead of the Budget, putting UBS’s London operations under review.
Why
The policy risk is presently about potential cost pressure rather than a quantified hit to UBS earnings, because the tax design has not been settled. UBS’s older FY2017 figures show $29.2B of revenue and a 3.9% net margin, but they are too dated to translate this signal into a current earnings estimate.
What could change this view
The read is invalidated if the Budget contains no bank tax measure or limits the charge in a way that excludes UBS’s London operations.
▲ The case it holds
UBS’s global scale, with $29.2B of FY2017 revenue, could leave the group better able to absorb a targeted UK charge than smaller domestic banks.
▼ The case it breaks
A new UK levy would add a direct cost to banking operations, while the 3.9% FY2017 net margin illustrates how a sector charge could matter if passed through to earnings.
Prices: 1D EOD · OCT 15 CLOSE, licensed end-of-day data.
Source: Financial Times · Published here FRI, OCT 16 · 12:33 AM ET · 3 reports · 2 publishers in this record · How this is decided →
Photo: Stock photo · Phil Evenden
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