Speaking at the Budget and Spending Review, Rishi Sunak said the Treasury would “retain a surcharge of three per cent” on the additional levy going forward.
The tax has been set at eight per cent since 2015.
Sunak added: “The overall rate for corporation tax on banks will in 2023 increase from 27 per cent to 28 per cent and will remain higher than the rate paid by other companies.”
In an aim to encourage competition in the financial services market, the annual allowance for challenger banks was raised to £100m meaning the surcharge will not be applied if profits are under the threshold.
He said the competition that smaller banks were introducing to the industry was “good for the sector and good for consumers”.
Sunak said it would be “irresponsible” to completely abolish business rates as it raised £25bn a year. However, he said reforms had been made to ease the burden and make the system fairer.
Business rates will now be reviewed at shorter intervals of three years with the next review expected in 2023.
An investment relief was also announced to allow companies to make green renovations to their premises.
“From 2023 every single business will be able to make property improvements and for 12 months pay no extra business rates.
“Together with the new green investment relief, we’re introducing investment incentives totalling £750m,” he added.
Sunak said this would help businesses when installing air conditioning, CCTV or bike shelters.
It was also announced that the planned increase to the business rates multiplier would be suspended for an additional year, signifying a tax cut worth £4.6bn over five years.