Nationwide Building Society members who received the latest £100 Fairer Share payment may need to check how it is treated for tax purposes, following comments from consumer advocate Martin Lewis on his BBC podcast.
The payment, which is part of Nationwide’s annual profit distribution to eligible members, has now been issued for a fourth time. The latest round was paid between June 10 and June 30, with millions of customers receiving £100 each if they met the qualifying criteria.
Eligibility generally required customers to hold a Nationwide current account along with either a savings account or mortgage, plus certain account activity in recent months. Nationwide has confirmed that most payments have now been completed.
While the payment is widely seen as a welcome bonus, its tax treatment means some recipients may need to consider whether any liability arises under savings income rules.
Payment
Martin Lewis addressed the issue on his BBC podcast after a listener asked how the £100 payment should be classified, particularly for those holding joint accounts.
He explained that the Nationwide Fairer Share payment is treated differently from typical bank incentives such as switching bonuses or cashback. Those are generally not taxable. However, the Fairer Share payment is classed as interest for tax purposes because it is linked to membership of a mutual organisation.
In practical terms, this means the payment can fall under savings income rules and may count towards an individual’s Personal Savings Allowance.
Tax
The key factor is whether an individual exceeds their Personal Savings Allowance. This allowance is currently £1,000 for basic rate taxpayers and £500 for higher rate taxpayers. Additional rate taxpayers do not receive an allowance.
If total savings income, including this payment, stays within the allowance, no tax is due. If it exceeds the threshold, the excess becomes taxable at the individual’s marginal income tax rate.
Martin Lewis highlighted that this classification is what makes the payment different from other types of bank rewards, and why it may appear on HMRC records as interest rather than a one-off bonus.
Joint
A key point raised during the discussion relates to joint accounts. In these cases, the £100 payment is generally treated as split equally between account holders.
That means each person may be considered to have received £50 for tax purposes, even if the payment was credited to a single account.
Martin Lewis noted that this 50-50 split is consistent with how joint savings interest is normally handled. However, he also indicated that it is not entirely clear how each case is reported to HMRC in practice, and that individuals may need to confirm their specific position if it affects their tax liability.
Nationwide has also indicated that while the payment belongs to the eligible member, HMRC may assume a split in joint account situations. Customers who are affected may need to contact HMRC if their tax position needs adjusting.
Impact
For most basic rate taxpayers, the tax impact is likely to be limited. If the £50 portion of the payment is taxable and exceeds allowance thresholds, the resulting liability would typically be around £10.
Higher rate taxpayers could face around £20 in tax on the same amount, while additional rate taxpayers could pay approximately £22.50, depending on their overall income and savings position.
These figures assume the £50 share is fully taxable and not covered by any remaining Personal Savings Allowance.
While the sums involved are relatively small for most individuals, the issue highlights how loyalty payments from financial institutions can be treated differently depending on their classification. It also reinforces the importance of checking how such payments are reported, particularly for customers with multiple savings sources or joint accounts.
The latest Fairer Share payment continues Nationwide’s approach of distributing part of its profits back to members, but the tax treatment means some recipients may need to factor it into their wider savings income reporting for the tax year.
The Nationwide £100 Fairer Share payment remains a straightforward cash benefit for eligible members, but its classification as taxable interest means it can interact with existing savings allowances. For joint account holders, the assumed 50-50 split adds another layer to how the payment may be assessed for tax purposes, making it worth checking individual circumstances where savings income is already close to allowance limits.
FAQs
Is the Nationwide £100 payment taxable?
Yes, it is treated as savings interest for tax purposes.
How is a joint account payment split?
It is generally treated as £50 per person.
Who pays tax on the payment?
Only those exceeding their Personal Savings Allowance.
Do basic rate taxpayers pay tax on it?
Only if total savings income exceeds £1,000 allowance.
