HC Deb 11 May 1995 vol 259 c870
2. Mr. Fraser

To ask the Chancellor of the Exchequer if he will make it his policy that an unmarried couple owning a house and who have jointly borrowed £60,000 or more are not penalised in terms of MIRAS. [22226]

The Financial Secretary to the Treasury (Sir George Young)

Since 1 August 1988, mortgage interest relief has been restricted to a loan of £30,000 per residence, regardless of the number or marital status of the people buying together. That rule ensures that married and unmarried couples are treated in the same way. Unmarried people buying a house together before 1 August 1988 can keep any higher level of relief to which they were entitled, as long as their circumstances do not change. However, if they move, replace the loan, or marry, their limit for relief falls to £30,000 between them.

Mr. Fraser

Does that mean that, if an unmarried couple who bought their house before 1988 get married, the Government put a tax on marriage and legitimacy? Surely that is not Government policy. Is it not about time that the law was changed, so that those cohabitees who do marry do not suffer a tax penalty?

Sir George Young

The law was changed to remove exactly the injustice to which the hon. Gentleman refers, because, under the old rules, an unmarried couple could obtain as much as twice the amount of mortgage interest tax relief as a married couple. That was the injustice that we removed in 1988. We also gave transitional relief to those who had bought under the old rules, until such time as their circumstances changed.

If we were to do what I believe that the hon. Gentleman wants us to do, we would simply continue to entrench an injustice that Conservative Members, at least, find unacceptable.

Mr. Devlin

Surely it is right that married couples should be in no worse a position than unmarried couples, and therefore the restriction that took place in 1988 was perfectly just and well thought out. In fact, we should have done it earlier.

Sir George Young

I agree with my hon. Friend, and I find it perverse that a decision that we took in 1988, which I am not aware was criticised by Opposition Members at the time, has now come in for rather belated criticism from the hon. Member for Norwood (Mr. Fraser).

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