The CFO of Lloyds Banking Group has urged the government not to extend its planned increase in the bank corporation tax surcharge beyond March 2028, arguing that a prolonged levy could undermine lending, investment and the UK's competitiveness as a financial centre.

Speaking after the lender's third-quarter results, CFO William Chalmers said the industry accepted the government's fiscal challenges but warned that higher taxes on banks were "unhelpful" to economic growth objectives. He said the sector plays a critical role in providing finance to households and businesses and helping drive UK growth.

It makes Chalmers one of the first senior banking executives to publicly push back against the government's new bank tax increase.

The comments follow Chancellor John Healey's Budget announcement that the bank surcharge will double from 3% to 6% from January for a 15‑month period, with the extra revenue earmarked to help fund household energy bill support. While ministers have described the measure as temporary, Chalmers questioned the link between energy prices and bank taxes and said he hoped the increase would not become a longer-term feature of the tax regime.

“It is important that the UK banking sector is able to deliver banking services to businesses and households and communities in a cost-effective way, in order to promote UK growth,” Chalmers said.

“We therefore very much hope that yesterday’s tax increase is indeed a temporary measure, to help ensure the business environment remains consistent with supporting long-term investment,” he said.

Although the Treasury has pledged to legislate for the 15-month limit, concerns remain that further energy price pressures could prompt an extension.

Lloyds on Thursday reported third-quarter pre-tax profits of £2.3bn, up from £1.2bn a year earlier, although the comparison was flattered by an £800m provision for motor finance compensation in the previous year.

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