§ Mr. Raynsfordasked the Chancellor of the Exchequer if he will estimate the increase in revenue at outturn prices in the current year of applying value added tax to the purchase cost of housing, at the standard rate.
§ Mr. BrookeI refer the hon. Member to the reply which I gave to the hon. Member for Great Grimsby (Mr. Mitchell) on 4 November 1986 at column 324.
§ Mr. Raynsfordasked the Chancellor of the Exchequer if he will estimate the increase in revenue at outturn prices in the current year of withdrawing capital gains tax exemption from those owners of houses who sell properties which have been used as a primary residence.
§ Mr. Norman LamontOnly a very tentative estimate is possible on an ex ante basis, of about £2,500 million in respect of 1985–86. This estimate assumes that there would be no relief for gains when disposal proceeds were applied to the purchase of another dwelling and makes no allowance for any consequential effects on the length of ownership, on the housing market generally or on the yield of other taxes. In practice house prices would almost certainly be affected and the number of disposals would go down. Both these effects could substantially reduce the yield.
§ Mr. Raynsfordasked the Chancellor of the Exchequer if he will estimate the increase in revenue at outturn prices in the current year of tax relief on owner occupiers' mortgage interest and interest on other loans for house 315W purchase and improvement being restricted to the standard rate of income tax including the revenue raised by virtue of people paying tax at the higher rate due to the withdrawal of mortgage interest relief.
§ Mr. Norman LamontAssuming no consequential changes to the distribution of mortgages outstanding, the direct revenue yield in a full year at 1986–87 levels from restricting relief to the basic rate is estimated at £320 million.