HC Deb 23 November 1978 vol 958 c1460
6. Mr. Hal Miller

asked the Chancellor of the Exchequer whether he has any proposals to reduce the amount of tax relief allowed on mortgage interest payments.

The Chief Secretary to the Treasury (Mr. Joel Barnett)

No, Sir.

Mr. Miller

While thanking the Chief Secretary for ignoring the proceedings of the Labour Party conference, may I ask him whether he will now address his mind, following the recent stabilisation, as the Chancellor describes it, in mortgage interest rates, to the question of the Inland Revenue failing to recode people's tax and therefore in effect reducing the interest rate relief?

Mr. Barnett

I can tell the hon. Gentleman that since January this year the allowance in the coding has been taken at 9½ per cent., whereas for the greater number of mortgage payers the actual interest they were paying was 8½ per cent. So for the rest of this income tax year, 1978–79, there will be for a large number of taxpayers an underpayment of tax; for others there will be an overpayment but of fairly modest proportions. In fact, it will depend upon when the increase takes place. For some, it will take place almost immediately; for others it may be up to six months from the date of the announcement. Thus, the hon. Gentleman will see that at the most the situation will be nothing like what he and some others have indicated.

Mr. Litterick

What is likely to be the approximate total value of the subsidy at the end of the current financial year given to owner-occupiers as a result of the increase in mortgage interest rates?

Mr. Barnett

The present estimate of tax relief in 1978–79 is £1,110 million.