Yorkshire to fight against new taxation on lenders

Yorkshire Building Society is leading the charge against the Government’s shock Budget decision to penalise building societies with the introduction of a new tax on mortgage lenders.

Yorkshire said ​it is optimistic it can persuade the Government to scrap plans for the new tax, which will cost the building society sector over £125m a year.

This comes at a time when building societies have continued to lend money to homebuyers when banks have closed their doors.

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Yorkshire said it is determined to fight the tax as building societies played no part in the financial crisis and they shouldn’t be made to pay for the litany of mistakes made by the big banks.

Yorkshire, the UK’s second biggest building society, said the tax will cost it £15m a year and the six biggest societies will be forced to contribute more than a third of the revenue the Chancellor will raise from the tax.

Skipton, the fourth biggest society, said the tax will cost it £6m and Leeds, the fifth biggest, said it will take a £5m hit. The other three affected societies are Nationwide, Coventry and Principality.

The Institute for Fiscal Studies has said the new bank surcharge is flawed.

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Andy Caton,​ ​Yorkshire’s​ chief ​t​reasury and ​c​orporate ​a​ffairs ​o​ffice​r, said:​ “This new tax has been roundly condemned by the likes of the Institute for Fiscal Studies as being badly targeted and fundamentally flawed.”

He added that it will hit the mutual building societies and other challengers disproportionately, as well as undermining the Government’s desire to improve competition and diversity in the market.

“The bank levy was put in place as a response to the cost borne by the taxpayer in bailing out the banks during the financial crisis. That will now be halved over the next five years and replaced by the new surcharge which is imposed on a much wider group of providers,” he said. “It is a tax on member value and a sop to the likes of HSBC who threatened to pull out of the UK because of the impact of the bank levy.”