Barclays profits surged 30% in the second quarter, reaching £3.3bn and pushing the half-year total to £6.1bn. This windfall has reignited demands for Andy Burnham to increase the tax on UK banks, with the Trades Union Congress (TUC) leading the charge.
The bank set aside £1.3bn for its bonus pool in the first half of 2024, a 30% jump from £1bn a year earlier. Barclays also announced a £1bn share buyback and £800m in dividends for shareholders, further fueling criticism that banks are benefiting from high interest rates while households struggle with mortgage costs and rising bills.
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Why Are Barclays Profits Soaring?
Higher interest rates set by the Bank of England have widened the gap between what banks pay on deposits and what they charge on loans. Barclays, like other major lenders, has seen net interest income climb sharply. This has boosted profitability across the board, allowing the bank to increase shareholder returns and employee bonuses.
Barclays Bonus Pool Details
The bonus pool of £1.3bn covers both annual and deferred bonuses. Final pay decisions are expected by the end of February 2025. High-performing bankers could see generous payouts, adding to the public debate over fairness.
| Metric | H1 2024 | H1 2023 | Change |
|---|---|---|---|
| Pre-tax profit (Q2) | £3.3bn | £2.5bn | +31% |
| Half-year pre-tax profit | £6.1bn | £5.2bn | +17% |
| Bonus pool | £1.3bn | £1.0bn | +30% |
| Share buyback | £1bn | — | — |
| Dividends | £800m | — | — |
Calls for a Bank Tax Increase
TUC General Secretary Paul Nowak said: “Big banks like Barclays are raking it in while working people and local businesses are struggling. High interest rates have been a boon for banks but have meant mortgage misery and higher bills for the rest of us.” He urged Burnham to use the extra revenue from a higher bank surcharge to bring down energy bills and support families.
Barclays executives countered that UK banks already face a significantly higher tax burden than foreign competitors. According to UK Finance, the effective tax rate for UK banks is 46.4% when including employment taxes and VAT, compared to 38.9% for banks based in other major economies.
Key Takeaways
- Barclays profits jumped 30% in Q2, with half-year earnings of £6.1bn.
- The bonus pool rose to £1.3bn, up 30% year-on-year.
- Shareholders received £1bn in buybacks and £800m in dividends.
- Labour figures, including TUC, are pressing Andy Burnham to raise the bank tax surcharge.
- UK banks claim they are already taxed at 46.4%, above the international average of 38.9%.
FAQ
Why are Barclays profits increasing so much?
Higher interest rates set by the Bank of England have boosted banks' net interest margins, meaning Barclays earns more from lending compared to what it pays on deposits. This has driven up profits across the banking sector.
What is the current bank tax rate in the UK?
The UK bank surcharge is 3% on profits above £100m, plus the main corporation tax rate of 25%. Including employment taxes and VAT, UK Finance estimates the effective rate for UK banks is 46.4%.
How would a higher bank tax affect consumers?
Proponents argue that extra tax revenue could be used to lower energy bills, support mortgage holders, and fund public services. However, banks warn that higher taxes could reduce lending or push costs onto customers.
As the debate heats up, all eyes will be on Andy Burnham and the new government to see whether they choose to increase the bank tax surcharge. For now, Barclays profits continue to climb, and the battle over fair taxation is far from over.
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