Barclays £1bn hit from Trump tax shake-up

sWEEPING Us tax cuts are to cost Barclays bank £1bn – raising fears it may be unable to hike dividends as quickly as it had hoped.

President Donald trump last week secured the biggest changes to revenue collection since ronald reagan in the 1980s, slashing corporation taxes from 35pc to 21pc to get the economy moving.

But one side-effect has been to reduce tax credits falling for businesses which suffered losses in previous years.

When firms lose money, they can offset some of this it future profits to keep tax bills down.

But because corporation tax will be lower in coming years, the savings they can make will fall. Barclays said this will result in a one-off £1bn hit in its 2017 results in february.

oil titan shell says it could face a charge of between £1.5bn and £1.9bn.

But it added that the reforms will be favourable in the long run, and shares rose 0.7pc, or 16p, to 2487.5p. the Barclays announcement could force it to put off a possible increase to the dividend, following a year in which profits are likely to have been lifted by better global growth and reduced bills for mis-selling PPI.

Despite the extra tax hit, Barclays said: ‘this reduction in the statutory Us federal rate is expected to positively impact Barclays’ future Us after-tax earnings.’

the bank added it is still working out the implications. shares were up 0.3pc, or 0.5p, to 202.65p.

other lenders have already warned they will face extra costs because of the new corporation rate.

Credit suisse is expecting a £1.7bn bill when it reveals 2017 results, potentially dragging the stuttering business to a full-year loss.

fellow suisse bank UBs has said that it is expecting a £2.3bn charge.