Taxation strategy

This document sets out the strategy and approach of Nationwide Building Society and its subsidiaries (the Society) to the management of its tax affairs and the management of tax risk for the 2023/24 financial year. This document has been approved by the Board of Directors and is published annually.

As a mutual, we are owned by our members, which means we think about profit in a different way from our banking peers. We do not have to pursue profit to pay shareholders dividends. Instead, we balance our need to retain sufficient profit to remain financially strong, with rewarding members and our commitment to share our success through:

• Delivering value in banking and rewarding loyalty
• Providing brilliant and trusted service
• Product and service propositions that meet the needs and expectations of existing and future customers

Our mutuality also requires us to consider the taxes paid and collected on our business operations as an important part of the economic and social contribution we make to the wider society that we serve. This governs our approach to, and interactions with, tax authorities. As a result, the Society strives to pay the right amount of tax at the right time in accordance with legal requirements and consistent with our strong commitment to social responsibility.

We define tax risk as the failure to comply with the letter and spirit of tax legislation, resulting in inaccurate reporting or payments to tax authorities, inappropriate tax judgements or reputational damage for the Society.

The Society’s Tax Management function identifies and monitors tax risks and uncertain tax positions arising from Nationwide’s business operations and manages their resolution.

The Society engages the services of external tax advisers where specialist expertise is required which the team of in-house tax professionals do not have, or where external assurance is considered necessary on an issue in which there is significant tax risk or legal uncertainty.

The Society adopts a prudent approach to risk management, managed through an Enterprise Risk Management Framework which sets out minimum standards and processes for risk management. A detailed internal Tax Policy is used to manage tax risk across the Society, within this framework.

We aim to be recognised as a low risk and compliant business by HMRC and every tax authority with which we engage. We do not set a prescribed target for the level of tax risk we are prepared to accept, nor do we set the attainment of a specified effective tax rate as a business objective.

The Society has adopted the Code of Practice on Taxation for Banks (“The Code”). The Society will only undertake tax planning that supports genuine commercial activity and which is consistent with the intentions of Parliament when relevant laws were enacted.

The Society is owned by its members and we will put our members’ interests first by realising entitlement to legitimate tax reliefs and allowances and by looking to mitigate tax costs arising on transactions entered into in the ordinary course of business.

The Society will not undertake tax planning which we consider is likely to damage our business reputation or is not considered consistent with our mutual values. We will not engage in, facilitate, or promote tax arrangements to third parties that we consider are contrary to the intentions of Parliament.

The Society does not tolerate activities which facilitate tax evasion and we are committed to preventing the facilitation of tax evasion by individuals or businesses associated with the Society’s operations. We do this by developing prevention procedures, carrying out regular due diligence and risk assessments of our operations and promoting awareness through training programmes and a culture of compliance throughout the Society.

Accountability for tax strategy and policy rests with the Society’s Board of Directors. The Chief Financial Officer is the Senior Accounting Officer as defined in Schedule 46 Finance Act 2009 and has personal responsibility to ensure we have appropriate systems, processes and people to ensure Nationwide produces tax returns which calculate tax liabilities accurately.

The Board and the Chief Financial Officer delegate authority to the Director of Financial Reporting and Tax, who leads a department of in-house tax specialists, to manage the Society’s tax affairs. This includes the responsibility to ensure the Society complies with all tax obligations and that any tax planning undertaken is consistent with our business strategy, the requirements of the Code and with this Taxation Strategy. Formal governance processes are in place to assess significant tax judgements.

An Executive Tax Summary, including performance against key tax management indicators and commentary on the management of tax risks, is sent to the Chief Financial Officer quarterly. Significant new tax issues and judgements are escalated to and discussed with the Chief Financial Officer as they arise.

A paper is presented annually to the Audit Committee containing commentary on significant tax issues and risks.

The Society is a UK-focused building society. We consider that tax authorities, and particularly HMRC in the UK, are important external stakeholders in our business.

We believe we have developed a relationship of trust with HMRC in which we adopt an open and transparent approach to promote cooperative compliance. We are proactive in highlighting significant uncertainties in tax law to HMRC in relation to our business transactions and endeavour to agree these uncertainties with HMRC in real time before the relevant return is due.

If all other methods of dispute resolution with the tax authorities have been exhausted, and if the Board considers the issue is of sufficient importance to the interests of our membership, we will use the court process to resolve the matter. Such instances are rare.

To comply with the US Foreign Account Tax Compliance Act (FATCA) and the OECD Common Reporting Standard, the Society has continued to invest in systems to put in place procedures to facilitate the reporting of customer account information by HMRC to the appropriate non-UK tax authority.

The publication of this document complies with the requirements of Section 16(2) Schedule 19 Finance Act 2016.

In our financial year ended 4 April 2023, Nationwide paid taxes in total of £881m. In the same period, Nationwide collected taxes in total on behalf of HMRC of £182m. Almost all of these amounts, both taxes paid and those collected on behalf of HMRC, were paid in the UK.