Barclays is giving a further £500m to shareholders after reporting a jump in quarterly profits, as the lender steels itself for an increase in UK bank taxes at next week’s budget.

The lender said it logged £2.3bn in pre-tax profits over the July to September quarter, up 12% from £2.1bn during the same period last year.

The bank’s chief executive, CS Venkatakrishnan, said he would be passing more cash to investors through a £500m share buyback, taking the total amount given to shareholders since January – through buybacks and dividends – to £2.8bn.

It comes only days before the chancellor, John Healey, is due to announce a hike on banks in the 28 October budget, as the prime minister Andy Burnham’s government looks for ways to raise revenue to help fund cost of living support programmes.

Barclays’ strong performance included a 6% rise in net interest income at its UK retail banking operations, to £2bn. The figure has become a flashpoint for campaigners pushing for a bank tax.…