View more on these topics

‘Bank profits charge could take £20bn out of sector’

The Building Societies Association has warned that a new charge on bank profits could take up to £20bn out of the mortgage market over the next five years.

In the July Budget, Chancellor George Osborne announced plans to gradually reduce the levy imposed on banks and instead bring in an 8 per cent surcharge on profits from next January.

The tax will hit institutions recording more than £25m in annual profits, while the levy will drop from 0.21 per cent to 0.1 per cent by 2021.

The BSA says this will unfairly target its largest members because, unlike banks, they are unable to raise capital through methods other than retained profits.

As a result, profits that would otherwise be used to support further lending will now be subject to tax.

The BSA says under the proposals Nationwide, Skipton, Yorkshire, Coventry, Leeds and Principality building societies could be left with an additional annual tax bill of £126m.

It estimates this sum could be used to support as much as £4bn a year of mortgage lending, or £20bn over the next five years.

It is only Nationwide that pays the bank levy, so five of the top six building societies will not benefit from the corresponding reduction in costs.

One building society source says: “The Government said in its manifesto that it wants to support aspiring buyers. But now capital that could have been put aside as retained profit has to go on the tax, which otherwise would equate to £20bn of lending.

“We can’t say for sure that lending won’t happen but that money is now at risk.”

The trade body is in talks with the Treasury over potential reforms to the proposals.



58% of brokers want Osborne to scrap ‘unfair’ BTL tax relief cut

Nearly six in 10 mortgage professionals believe Chancellor George Osborne should reverse his proposed cuts to landlord tax relief. A Mortgage Strategy poll of 192 readers shows 58 per cent believe Osborne should scrap plans to limit the tax relief landlords can claim on property finance costs to the basic rate of income tax. The […]


Nationwide earmarks £1bn for new range of 95% LTV deals

Nationwide is set to launch a range of standard 95 per cent LTV mortgages – its first outside of a scheme since 2008. The range starts at 3.99 per cent and is available through brokers as well as branches. The lender says it has earmarked an additional £1bn in lending for the range over the […]


Bank tax ‘will raise twice Govt estimate at £12bn’

The Chancellor’s new bank tax on profits will raise almost twice the amount estimated by the Government at £12bn, according to EY. Chancellor George Osborne announced in the summer Budget that the bank levy will be gradually reduced over the next six years, with a new tax applicable from 1 January 2016. The current levy […]


Bank of England holds base rate again

The Bank of England has again voted to hold the Base Rate at 0.5 per cent, marking 78 consecutive months without change. In a vote of the MPC’s nine members, only one dissented, with Ian McCafferty arguing the base rate should be increased by 25 basis points. McCafferty cited fears that an rising level of […]


Guide: what you need to consider for your auto-enrolment project

In this guide, Johnson Fleming reveals what items you need to understand to gauge the impact of auto-enrolment on your business. The guide focuses on: the impact that your auto-enrolment scheme will have on you; assessing your workforce; understanding your staging date; reviewing your current provision; and modelling contribution levels and costs.


News and expert analysis straight to your inbox

Sign up