Some City of London executives are concerned the government may use this month’s budget to levy a windfall tax on the profits of domestic banks even as the UK operations of international lenders are exempted, according to people with knowledge of the matter.

Such a move would be likely to spark fury among domestic lenders and across the UK business world about the approach of the Labour government, under Prime Minister Andy Burnham, toward the private sector. Chancellor of the Exchequer John Healey is set to lay out the government’s next budget on Oct. 28, and is planning to meet with bank executives next week.

There are concerns among bankers that the government believes UK lenders haven’t done enough to support small businesses, said two of the people, all of whom asked not to be identified discussing private talks. Some of the revenues raised from a new tax could be used to lessen costs for those businesses, two people said.

There is also nervousness about the way banks’ recent bumper profits could sway the government. The four largest UK banks — Lloyds Banking Group Plc, Barclays Plc, NatWest Group Plc and HSBC Holdings Plc — in recent quarters have enjoyed strong returns, which is likely to continue if interest rates stay raised to combat high inflation. The impact of any new tax could be mitigated with messaging that the levy would be for a limited time, two people said.

A windfall tax on UK profits of those big four lenders could raise as much as £18.9 billion ($25 billion), according to a calculation from Positive Money, a group that campaigns against inequality. The Green Party has called for a 38% windfall tax on banks in order to fund a tax cut for small- and medium-sized enterprises.

Some City figures said they thought it was hard to believe Burnham’s team would only target UK banks, given its stated ambitions to champion British business. Financial services is also one of Labour’s priority sectors, seen as key to the country’s growth.

“As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals,” a representative for the Treasury said in a statement.

Labour may be emboldened to introduce a one-time tax on banks after the Conservatives under Margaret Thatcher in 1981 levied a windfall tax on banks, one of the people said. The move could also help the party appeal to anti-bank sentiment of some of the public, such as many Green Party voters, said another person familiar with the thinking of some inside the Labour party.

“To support investment, competitiveness and growth, the government should provide certainty by keeping bank taxation stable and avoid any further sector-specific tax increases,” said a spokesperson for financial services lobby group UK Finance.

Spokespeople for Barclays, NatWest, Lloyds and HSBC declined to comment.

Foreign banks may be left out of any new tax as those with large footprints and operations in the UK could move staff to other countries or elect not grow their presence further in the future, one of the people said. The government could position the distinction as being driven by commitment to fostering the City’s international competitiveness, the person added.

Earlier this year, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon warned the bank could reconsider plans for new headquarters in London if the UK becomes “hostile” to lenders again.

Fears of a potential windfall tax have grown since the Labour Party conference in Liverpool last week. Executives praised Burnham’s strong leadership after a prolonged period of drift in British politics, but raised concerns about the lack of detail from Healey on economic policies.

There’s so far no clarity if the Treasury under Healey would go ahead with any additional tax, as officials are trying to keep the contents of the Budget firmly under wraps. Last year’s budget was preempted by a string of market-impacting leaks.

A potential windfall tax would probably be on top of the surcharge banks already pay on their profits, which is currently at 3% above the 25% corporation tax rate. Banks have also paid a levy on their balance sheets since the 2010s to help pay for the cost of the financial crisis.

The Institute for Public Policy Research, a left-leaning think tank that’s close to the Labour government, last year suggested a tax on banks to recover the “staggering” state subsidy they had received as a result of the Bank of England’s quantitative easing program.

Ex-Chancellor Rachel Reeves considered raising bank taxes in her November 2025 budget but backed away from the plan following intense lobbying by banks.