UK's Reeves set to spare banks from budget tax raid, FT reports

UK's Reeves set to spare banks from budget tax raid, FT reports

UK Budget Tax Strategy and Banking Sector

(Reuters) -British Finance Minister Rachel Reeves is set to spare banks from a punitive budget tax raid, after making it clear to colleagues she wants the sector to remain competitive and able to support the country’s growth, the Financial Times reported on Wednesday.

Reeves' Approach to Taxation

Reuters could not immediately confirm the report. The Treasury declined to comment. 

Impact on Financial Investments

“There’s obviously a list of possible tax measures, but raising taxes on banks is a long way down that list,” the newspaper said, citing one person briefed on Reeves' thinking. 

Predictions from the Resolution Foundation

FT, citing another undefined source, said: "She is not minded to do this.”

Reeves is expected to raise tens of billions of pounds in taxes in her November 26 budget to stay on track for her fiscal targets, a key issue for bond investors.

In October, Rachel Reeves addressed concerns over potential tax hikes on banks, emphasizing her aim to make Britain "a great place to do business" and pointing to recent investments by U.S. financial firms.

"It's not all about tax, but I do want to have a competitive environment for all businesses in Britain," she said, adding that she did not dispute industry assessments that British taxes on financial services were relatively high.

Reeves said on Tuesday that "each of us must do our bit", raising expectations that she will increase taxes broadly. Any spending cuts are likely to be small.

The Resolution Foundation think tank - whose former head Torsten Bell is now a minister advising Reeves - predicts she will need to increase taxes by 26 billion pounds ($34.89 billion). 

($1 = 0.7451 pounds)

(Reporting by Gnaneshwar Rajan in Bengaluru; Editing by Chris Reese and Daniel Wallis)