§ Mr. KirkwoodTo ask the Chancellor of the Exchequer what is the estimated full-year revenue effect of applying mortgage interest tax relief to the residence rather than the individual; and what is the estimated effect on the mortgage interest tax relief ceiling if the change is revenue neutral in 1988–89 and 1989–90.
§ Mr. Norman LamontFor loans taken out from 1 August 1988, mortgage interest tax relief is limited to the interest on £30,000 per residence regardless of the number782W 783W of borrowers. Estimates of the yield arising from this measure were given in table 4.1 of the 1988–89 Financial Statement and Budget Report. The direct revenue cost of an increase of £1,000 in the ceiling for mortgage interest relief would exceed the yield from this measure.
§ Mr. KirkwoodTo ask the Chancellor of the Exchequer if he will publish in theOfficial Report a table showing by range of income estimates for 1988–89 and 1989–90 the number of tax units receiving mortgage interest tax relief, the average value per mortgagor and the total cost of the relief.
§ Mr. Norman LamontLatest estimates for 1988–89 are given in the table. These are based on projections to 1988–89 of information in the 1986–87 survey of personal incomes and the 1986 family expenditure survey and are provisional. The estimates include mortgages formerly under the option mortgage sheme which are now subsumed within MIRAS. The estimate of the cost of mortgage interest relief in 1988–89 takes account of the recently announced increases in the mortgage interest rate. It would be premature to provide estimates for 1989–90, since the cost of the relief will depend on the amounts of mortgage lending, interest rates and the 1989–90 income tax rates arid bands.
Tax units1 receiving mortgage interest relief by range of total income 1988–89
Range of total income Numbers receiving mortgage interest relief (Thousands) Average value of relief to mortgagor (£) Total cost of relief (£ million) Under £5,000 690 400 270 £ 5,000 to £10,000 1,830 510 930 £10,000 to £15,000 2,530 560 1,410 £15,000 to £20,000 1,740 590 1,020 £20,000 to £25,000 1,040 650 670 £25,000 to £30,000 480 810 390 Over £30,000 790 1,020 810 Total 9,100 600 5,500 1 Single persons and married couples.
§ Mr. Sean HughesTo ask the Chancellor of the Exchequer how many cases of multiple mortgage interest relief at source claims have been detected in each year since the inception of the scheme; and what amounts of money were involved.
§ Mr. Norman LamontIt is tentatively estimated that about 500,000 single people are involved in multiple borrower mortgages. Figures on the total size of these loans are not available.
§ Mr. Sean HughesTo ask the Chancellor of the Exchequer what amounts of money on(a) a national and (b) a regional basis have been paid in mortgage interest relief at source in each of the last five years and in respect of what number of properties and persons.
§ Mr. SalmondTo ask the Chancellor of the Exchequer if he will estimate the annual cost to the Treasury of mortgage interest tax relief; and if he will publish a table breaking down this figure by county and by region.
§ Mr. Norman Lamont[holding answer 23 January 1989]: The table shows the latest estimates of the cost of mortgage interest relief in the United Kingdom— 784W including relief given outside the MIRAS system-and the number of tax units benefiting from this relief in each of the years 1984–85 to 1988–89. It is tentatively estimated that about 500,000 single people are involved in multiple borrower mortgages in respect of around 250,000 properties.
Cost of mortgage interest relief (£ million)
Number of tax1 units with mortgage interest relief (thousands)
1984–85 3,580 7,800 1985–86 4,750 8,100 1986–87 4,670 8,450 1987–88 24,800 28,750 1988–89 15,500 29,100 1 Singles and married couples. 2 Provisional. Following the introduction of MIRAS in April 1983, regional information on the cost of mortgage interest relief cannot be extracted from Inland Revenue records. The regional distribution can be estimated from the family expenditure survey (FES) but, as the sample size for the FES is relatively small, it is not possible to provide robust estimates of regional trends for the period after 1982–83. Accordingly the table provides an estimate of the regional distribution of mortgage interest relief based on FES data from 1984 to 1986. Information on the distribution of relief by county is not available.
Regional share of mortgage interest relief based on FES data for 1984 to 1986
Percentage Northern 3.8 Yorkshire and Humberside 7.2 North West 9.3 East Midlands 6.3 West Midlands 7.8 East Anglia 3.5 Greater London 14.1 Other South East 26.6 South West 8.5 Wales 4.2 Scotland 7.4 Northern Ireland 1.3 United Kingdom 100.0