§ Mr. Austin MitchellTo ask the Chancellor of the Exchequer (1) whether he will publish in theOfficial Report a table showing his estimate of the number of cases in which higher rate relief will be given on mortgage 729W interest payments in the current financial year together with (a) the gross amount of interest qualifying for relief, (b) the amount of higher rate relief, and (c) the number of recipients of working age and their distribution by personal tax category and by range of total income together with the average amount of relief given by the standard and higher rate of tax;
(2) whether he will publish in the Official Report a table showing by range of income and tax status an estimate of the saving to the Exchequer in a full year from abolishing, respectively, the upper earnings limit for national insurance contributions and higher rate relief on mortgage interest.
Beneficiaries1 of higher rate relief on mortgage interest by range of total income: 1988–89 Range of total income of Number tax units Gross amount of interest qualifying for relief Cost of excess over basic rate relief Average basic rate relief Average excess over basic rate relief Number of non-aged tax units £ thousand £ million £ million £ £ thousand Singles 20,001 to 25,000 30 70 5 640 160 30 25,001 to 30,000 35 85 10 620 340 35 30,001 to 40,000 25 65 10 630 370 25 40,001 to 50,000 10 25 5 620 370 10 Over 50,000 10 35 5 730 440 10 TOTAL 110 280 35 640 310 110 One-earner couples 20,001 to 25,000 20 45 .. 530 80 20 25,001 to 30,000 90 220 25 600 280 90 30,001 to 40,000 95 235 35 630 370 90 40,001 to 50,000 40 95 15 630 380 35 Over 50,000 50 150 20 730 440 50 TOTAL 295 745 100 630 340 290 Two-earner couples 20,001 to 25,000 .. 5 .. 580 50 .. 25,001 to 30,000 195 405 35 520 170 195 30,001 to 40,000 250 620 75 610 310 250 40,001 to 50,000 65 180 25 680 380 65 Over 50,000 80 230 35 710 420 80 TOTAL 595 1,435 170 600 280 595 All 20,001 to 25,000 50 120 5 590 120 50 25,001 to 30,000 320 710 70 550 220 320 30,001 to 40,000 370 920 120 620 330 365 40,001 to 50,000 115 300 45 660 380 110 Over 50,000 145 415 60 720 430 140 TOTAL 1,000 2,460 300 620 300 985 .. = less than £2,500 or £2.5 million as appropriate. Figures may not add due to rounding. 1 Includes about 190,000 tax units who are kept out of higher rate tax by this relief.
§ Mr. Austin MitchellTo ask the Chancellor of the Exchequer what is his estimate of the cost to the Exchequer of tax relief on interest payable on mortgages which have been taken out to raise cash for other purposes.
§ Mr. Norman LamontIt is estimated that tax relief amounting to around £100 million was falsely claimed in respect of alleged home improvement loans in 1986/87 (the last year for which figures are available). In addition, a relatively small but unqualified proportion of claims to relief on other loans has been claimed falsely.
§ Mr. McNamaraTo ask the Chancellor of the Exchequer whether a solicitor's letter stating the
730W
§ Mr. Norman LamontProvisional estimates of excess over basic rate relief on mortgage interest in 1988–89, based on a projection of the 1985–86 survey of personal incomes, are given in the table. These figures take no account of any behavioural changes which might result from the removal of higher rate relief on mortgage interest.
It is estimated that the full year yield, at 1988–89 levels, of the abolition of the upper earnings limit for national insurance contributions would be £1.7 billion. A breakdown of this figure by status and by income will be given after the summer recess.
purchaser's intention to buy a particular house at a particular price and dated on or before 31 July will satisfy the requirements of the Inland Revenue with respect to qualification for double MIRAS.
§ Mr. Norman LamontThe new residence basis for mortgage interest relief, being introduced in the Finance Bill, restricts tax relief to the interest on £30,000 per residence, rather than £30,000 per borrower, and takes effect on 1 August. It will apply to all loans for home purchase made on or after date.
A loan made on or after 1 August will however be treated as made before that date provided: 731W
- (a) the offer of the loan was made before 1 August and was evidenced in writing by the lender before that date, and
- (b) the borrower had entered into a binding contract before 1 August to acquire the property.
§ Mr. Austin MitchellTo ask the Chancellor of the Exchequer whether he will publish in theOfficial Report his estimate of the number of cases in which tax relief will be claimed through MIRAS or otherwise on mortgage interest payments on residential property in the current financial year together with (a) the estimated cost to the Exchequer and (b) the number of recipients of working age and their distribution by range of total income together with the average amount of relief given; and if he will break figures down as far as possible between single persons and one and two-earner married couples.
§ Mr. Norman Lamont[holding answer 27 July 1988]: Provisional estimates for the United Kingdom are given in the table. Following the introduction of MIRAS in April 1983, Inland Revenue administrative records cannot be used to provide comprehensive figures on the distribution of mortgage interest relief by range of income. The estimates in the reply are therefore based on projections of data in the 1985 family expenditure survey (FES) and 1985–86 survey of personal incomes, but the sample sizes do not permit reliable estimates to be made in all the detail requested.
The estimate of the cost of mortgage interest relief in 1988–89 takes account of the recently announced increases in the mortgage interest rate.
Tax units1 receiving mortgage interest relief by range of total income 1988–89 Range of total income Number of tax units with mortgage interest relief Average value of relief per mortgagor Cost of relief Thousands £ £ million Up to £5,000 690 340 240 £5,001 to £10,000 1,300 430 560 £10,001 to £15,000 2,440 520 1,270 £15,001 to £20,000 1,890 550 1,050 £20,001 to £25,000 1,110 570 630 £25,001 to £30,000 470 710 340 Over £30,000 700 950 660 Total 8,600 550 4,750 1 Single persons and married couples.