§ Mr. Cabornasked the Chancellor of the Exchequer what representations he has received concerning the 522W eligibility of loans for the installation and erection of swimming pools and tennis courts for mortgage interest tax relief.
§ Mr. Norman LamontMy right hon. Friend receives a number of representations on mortgage interest tax relief, but few concern the items which the hon. Gentleman mentions.
§ Mr. Cabornasked the Chancellor of the Exchequer what action he intends to take to prevent tax relief on mortgage or home improvement loans being provided for non-eligible items.
§ Mr. Norman LamontThe Inland Revenue already carries out checks on borrowers' mortgage interest relief claims, and on the lenders to ensure that they are operating the MIRAS arrangements properly. These compliance procedures will continue to be kept under regular review.
§ Mr. Christopher Hawkinsasked the Chancellor of the Exchequer (1) what is the cost to the Exchequer of mortgage interest relief claimed in respect of marginal rates of income tax above the basic rate;
(2) if he will estimate the cost to the Exchequer of raising the limit for mortgage interest relief by steps of £1,000 from £30,000 to £40,000 in respect of relief at basic rate only.
§ Mr. Norman Lamont[pursuant to his replies, 26 February 1987]: The direct revenue cost of mortgage interest tax relief at rates in excess of the basic rate in 1986–87 is estimated to be about £270 million.
Assuming no consequential changes to the distribution of mortgages outstanding, the direct revenue cost, in a full year at 1986–87 levels, of an increase in the ceiling for mortgage interest relief in respect of relief at basic rate only is estimated to be:
Ceiling £ Cost £ million 31,000 20 32,000 40 33,000 60 34,000 75 35,000 90 36,000 105 37,000 115 38,000 130 39,000 140 40,000 150 The cost of an increase in the ceiling at 1987–88 levels would probably be significantly higher than the estimates above, both because the number of new home loans over £30,000 has been increasing recently and because an increase in the ceiling might stimulate additional borrowing. The cost of relief at excess over basic rate arid of an increase in the ceiling for 1987–88 will also depend on the level of interest rates in that year as well as on the 1987–88 income tax rates and bands.