§ Mr. Eggar
asked the Chancellor of the Exchequerwhat was the cost in lost revenue of section 58 of the Finance Act 1980, which delayed the updating of the composite rate of tax applicable to building societies.
§ Mr. Peter Rees
About £200 million of additional composite rate tax would have been payable in 1980–81 if section 58 of the Finance Act 1980 had not deferred the use of information from that survey in calculating the rate.
However, the net loss of revenue would have been less. To the extent that any additional composite rate tax reduced building societies' cash flow their liability to corporation tax would have been reduced. To the extent that the societies acted to recoup the effect on their cash flow through increasing interest rates charged to borrowers or reducing interest rates paid to lenders, there would be a consequential loss of revenue in the form of an increase in the cost of mortgage interest relief or a reduction in the amount on which the composite rate of income tax was payable.