Shares in Barclays, NatWest and Lloyds rose about 4% after Chancellor John Healey announced a temporary increase in the bank surcharge, as relief spread through the sector.
The surcharge, an extra tax on banking profits on top of corporation tax, will rise by 3 percentage points from January, taking it to 6%.
It will last 15 months, with the money used to fund immediate help with energy bills.
Healey told MPs that "global economic storms" meant he was looking to banks to help fund breathing space for households.
He said the choice was "asking a bit more of our banks" to support ordinary people.
He also raised taxes on gambling to support the high street.
Less than feared
Investors had braced for a bigger blow.
Reports earlier this month said the surcharge could rise to 8%, the level it stood at until 2023, when it was cut to 3%.
The big four banks had fallen between 6% and 11% in October as that fear built.
Bloomberg reported this morning that the increase would be temporary and below 8%, which had already lifted the shares by about 2% before the announcement.
Who is most exposed
Domestic lenders carry most risk because the surcharge applies to UK banking profits above £100 million.
About 85% of Lloyds' and NatWest's group profits are eligible, against 33% at Barclays and 20% at HSBC.
Treasury figures show the existing 3% surcharge raised £1.2 billion in 2025-26, and each extra percentage point is estimated to raise a further £400 million a year.
Lloyds reports tomorrow and NatWest on Friday.
