Small challenger banks and building societies will receive a boost if Labour and the SNP are successful in their attempt to amend Osborne's new bank tax.

In his budget this year, the chancellor announced plans to replace the increasingly unpopular bank levy with an eight per cent surcharge on profits for banks of all sizes. By doing so, he hopes to spread the tax burden more widely across the sector and discourage them from risky borrowing.

But concerned about the negative impact this will have on minor organisations once the change is implemented next year, Labour and the SNP are seeking to make changes to the rule.

According to The Sunday Times, they want small banks to not have to pay the tax, as they believe making banks of all sizes make the payment will minimise competition in the sector.

Shadow chancellor Chris Leslie said the new tax did not “reflect the risks posed by larger financial institutions”.

A spokesman for the SNP treasury in Westminster said that although the party “initially welcomed” the surcharge, it was concerned about the consequences that would arise for small organisations.