RISHI Sunak's decision to cut tax surcharges for bank profits by more than half in his upcoming Autumn Budget has been condemned by the SNP.

The cut to taxes for banks comes less than a month after the UK cut Universal Credit for millions and as a hike in National Insurance payments is set to be introduced.

UK Chancellor Sunak, a former investment banker and hedge fund manager, is reportedly planning to cut the tax surcharge on bank profits in next week's Budget to help boost London’s competitiveness as a global financial centre.

Sunak is expected to announce that the surcharge will be cut from 8% to 3% (a cut of 62.5%) from April 2023 when he announces the UK Government's spending plans on Wednesday, October 27.

It comes ahead of a hike in corporation tax from 19% to 25% in 2023, which Sunak had cautioned risks making “the taxation of banks uncompetitive”.

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Banks currently pay 27% tax on profits, of which 19% is corporation tax and 8% the bank surcharge.

They would see their overall corporation tax charge increase to 33% in 2023 if the surcharge was not reduced but the expected reduction would instead rise to 28%, an increase of just one per cent.

The UK cut Universal Credit payments by £1040 per year for millions across the UK as a £20 per week uplift brought in due to the coronavirus pandemic was axed on Wednesday, October 6.

National Insurance contributions are set to rise from April 2022 by 1.25% which has been dubbed a new "Tory poll tax" by the SNP.

The National:

SNP shadow chancellor Alison Thewliss (above) said: “It beggars belief that at a time when Tory cuts and tax hikes will leave the majority of families worse off and push many into poverty - the Chancellor is planning a taxpayer-funded giveaway to banks so they can make bigger profits at our expense.

“It’s unclear whether this is some sort of bad joke - but ordinary families won’t be laughing if the Tories slash household incomes to fund handouts for the wealthiest in society.

“Under Boris Johnson, the UK already has the worst levels of poverty and inequality in north west Europe - and the highest levels of in-work poverty this century. It’s inexplicable that the Tories would fund tax breaks for the rich while poverty soars on their watch.

“It’s now beyond all doubt that there will be no fair recovery under Westminster rule. The only way to keep Scotland safe from Tory cuts is to become an independent country, with the full powers needed to build a fairer society.”

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The move to cut tax surcharges for bank profits follows comments by city minister John Glen MP last month flagging that the surcharge could be cut as he vowed that Britain’s financial services sector would enjoy “competitive tax rates”.

Glen also said at the time he would keep under review the bankers’ bonus cap as the UK looks to bolster the competitiveness of the City in the wake of Brexit, which has seen jobs and bank offices shift to rivals such as Frankfurt, Paris and New York.

The bank tax was introduced by former chancellor George Osborne on profits of more than £25 million in 2015, taking effect in January 2016, as cuts were made to the bank levy – launched in the wake of the 2008 financial crisis.