Risk & Economy » Tax » Nationwide: £300m bank ‘tax’ will hurt lending

Nationwide: £300m bank 'tax' will hurt lending

£300m bill could, instead, be used to support £10bn in lending, building society bemoans

THE GOVERNMENT’S PROPOSED BANK SURCHARGE risks hitting banks’ and building societies’ ability to lend, according to Nationwide.

In its interim management statement for the first quarter of 2015, the building society estimates the move would cost a net £300m over five years – equivalent to the capital required to support about £10bn of lending, it claims.

The 8% surcharge replaces the unpopular bank levy, which saw financial institutions including HSBC threaten to quit the UK, and is likely to be based on what the firms currently pay in corporation tax as it is phased in over the coming eight years.

According to an HMRC document released following the chancellor’s Summer Budget, the changes will bring in £415m for the Exchequer in 2016/2017, £555m in 2017/2018, £365m in 2018/2019, £225m in 2019/2020 and £105m in 2020/2021.

Nationwide chief executive Graham Beale said the tax surcharge might benefit major international banks in the UK, but warned it would have a disproportionate impact on building societies.

“This represents a missed opportunity to support diversity by acknowledging that building societies are different to banks and to recognise the contribution Nationwide and other mutuals make by lending to the UK economy, and the housing market in particular,” he said.

Beale said the financial year had “started strongly”.

“Nationwide accounted for more than a quarter of total net lending to the UK housing market,” he added.

Nationwide’s gross mortgage lending had increased by 17.2% to £6.8bn and net lending was up 23.5% to £2.1bn.

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