The Chancellor stated that the amendment will affect banks from the accounting period beginning on or after 1 April 2023 and where a company’s accounting period straddles 1 April 2023, the period will be split on a time apportionment basis and the surcharge will apply at 3% to the profits of the notional period starting on 1 April 2023.

The bank corporation tax surcharge is a charge of 8% on the profits of banks, payable in addition to corporation tax. Surcharge profits are calculated on the same basis as for corporation tax, but with some reliefs denied. Banking groups have an allowance of £25m and the surcharge is charged on any surcharge profits that go over this amount.

According to the Treasury, the measure is expected to impact an estimated 100 banks and according to the budget, banks are set to save £4bn in taxes over five years from the cut.