Mortgage Tax Relief (Hansard, 25 February 1993)

§ Mr. Hendry
To ask the Chancellor of the Exchequer what would be the saving if mortgage interest tax relief was limited to 25 per cent. of base rates.

§ Mr. Dorrell
The revenue yield from calculating mortgage interest relief in terms of 25 per cent. of interest charged at base rates rather than actual mortgage interest rates would be about £700 million at 1992–93 levels.

§ Mr. Hendry
To ask the Chancellor of the Exchequer what is the increase in cost to the Treasury, in terms of mortgage interest tax relief, of each percentage increase in interest rates.

§ Mr. Dorrell
About £500 million at 1992–93 levels.

§ Mr. Dewar
To ask the Chancellor of the Exchequer if he will estimate the effect on revenues in 1993–94, and in a full year, of(a) increasing and (b) decreasing the limit for mortgage tax relief by (i) £1,000, (ii) £2,000 (iii) £5,000 and (iv) £10,000.

§ Mr. Dorrell
The estimated costs at 1992–93 levels of increasing or decreasing the limit for mortgage interest tax relief are shown in the table. The estimates are based on the distribution of existing mortgages and therefore exclude behavioural effects which might result.
678W
The costs for 199394 will depend on the pattern of borrowing, the eligibility of borrowers for mortgage interest tax relief, tax rates and interest rates.

Limit on size of loan Cost (yield) of from increasing (decreasing) the ceiling on mortgage interest tax relief at 1992–93 levels

£ £ million

40,000 600

35,000 400

32,000 200

31,000 100

29,000 (100)

28,000 (200)

25,000 (500)

20,000 (1,100)

§ Mr. Milburn
To ask the Chancellor of the Exchequer (1) if he will provide a table showing the number of recipients of higher-rate mortgage interest tax relief for each year since 1979–80 in the United Kingdom by region;
(2) if he will provide a table showing the number of recipients of mortgage interest tax relief for each year since 1979–80 in the United Kingdom by region;
(3) what was the total value of providing higher-rate mortgage interest tax relief for each year since 1979–80 in the United Kingdom by region (a) at current prices and (b) at 1979–80 prices;
(4) pursuant to his answer of 17 June 1992, Official Report, columns 537–38, to the hon. Member for Angus, East (Mr. Welsh), if he will (a) update the table with the latest information he has available on mortgage interest tax relief and (b) provide the information at both 1979–80 prices and cash prices.

§ Mr. Dorrell
[holding answer 24 February 1993]: Information for the total of mortgage interest relief is in the tables. The regional distributions for 1979–80 to 1982–83 have been derived from the relevant surveys of personal incomes. However, following the introduction of mortgage interest relief at source—MIRAS—in April 1983, regional information cannot be extracted from Inland Revenue records. Broad estimates for the years 1983–84 to 1991–92 have accordingly been based on analyses of the family expenditure surveys for the years concerned.
Reliable estimates of the value of and the number of recipients of higher rate mortgage interest tax relief by region are not readily available and could be produced only at disproportionate cost.
679W

Cost of mortgage interest relief²

£ million

1979–80 1980–81 1981–82 1982–83 1983–84 1984–85 1985–86 1986–87 1987–88 1988–89 1989–90 1990–91 1991–92² ³ 1992–93²

Northern 60 80 70 95 100 140 180 200 210 250 310 350 310 230

Yorkshire 110 155 150 160 210 260 340 350 360 370 460 510 450 340

North West 135 200 180 215 260 330 440 490 510 530 690 770 640 500

East Midlands 85 115 110 130 180 230 300 320 330 340 430 480 410 340

West Midlands 145 160 190 170 230 280 370 350 360 430 550 620 510 400

East Anglia 45 50 60 75 90 130 170 170 180 220 270 300 250 180

Greater London 235 280 290 260 400 500 670 620 650 780 980 110 710 740

Other South East 375 555 600 650 740 950 1,270 1,220 1,260 1,350 1,750 1,940 1.510 1,390

South West 110 140 170 140 230 300 400 380 400 520 660 730 570 480

England 1,300 1.735 1,820 1,900 2,440 3,120 4,140 4,100 4,260 4,790 6,100 6,800 5,360 4,600

Wales 45 65 80 80 110 150 200 210 220 180 240 270 230 190

Scotland 85 125 120 140 190 260 350 300 310 370 470 530 420 340

Northern Ireland 20 35 30 30 40 50 60 60 60 60 90 100 90 70

United Kingdom 1,450 1.960 2,050 2,150 2,780 3,580 4,750 4,670 4,850 5,400 6,900 7,700 6,100 5,200

¹ Excludes option mortgage scheme (1979–80 to 1983–84).

² Provisional.

³ Higher rate relief was abolished in 1991–92.

Cost of mortgage interest relief at 1979–80 prices¹

£million

1979–80 1980–81 1981–82 1982–83 1983–84 1984–85 1985–86 1986–87 1987–88 1988–89 1989–90 1990–91 1991–92^{2 3} 1992–93²

Northern 60 70 50 60 60 70 100 110 110 120 150 150 120 90

Yorkshire 110 130 110 110 130 140 200 190 190 190 220 220 180 130

North West 135 170 130 140 160 180 250 260 260 270 320 340 260 190

East Midlands 85 100 80 90 110 120 170 170 170 170 200 210 160 130

West Midlands 145 140 140 110 140 150 210 190 190 220 260 270 200 150

East Anglia 45 40 40 50 60 70 110 90 90 100 130 130 100 70

Greater London 235 240 220 170 250 270 380 340 340 390 460 480 280 280

Other South East 375 470 450 430 470 510 720 660 660 680 820 850 600 530

South West 110 120 130 100 150 160 230 210 210 260 310 320 230 190

England 1,300 1,480 1,350 1,260 1,530 1,670 2,360 2,220 2,220 2,410 2,870 2,970 2.130 1,760

Wales 45 60 60 50 70 80 110 120 120 90 110 120 90 70

Scotland 85 110 90 90 120 140 200 160 160 180 220 230 170 130

Northern Ireland 20 30 20 20 20 20 40 30 30 30 40 40 40 30

United Kingdom 1,450 1,680 1,520 1,420 1,740 1,910 2,710 2,530 2,530 2,710 3,240 3,360 2,430 1,990

¹ Excludes option mortgage scheme (1979–80 to 1983–84).

² Provisional.

³ Higher rate relief was abolished in 1991–92.

Number of mortgagors¹

Thousands

1979–80 1980–81 1981–82 1982–83 1983–84 1984–85 1985–86 1986–87 1987–88 1988–89 1989–90 1990–91 1991–92^{2 3} 1992–93²

Northern 280 280 290 310 380 390 410 420 440 520 540 550 560 560

Yorkshire 580 570 560 560 680 700 730 740 770 770 780 800 800 780

North West 730 730 720 750 900 940 970 1,000 1,040 1,110 1,140 1,160 1,180 1,130

East Midlands 380 380 420 450 560 590 610 650 680 660 670 680 690 750

West Midlands 610 540 530 510 630 660 690 730 750 860 870 890 890 870

East Anglia 190 160 180 210 260 270 280 310 320 350 360 370 370 370

Greater London 750 720 660 620 770 800 840 900 930 1,010 1,020 1.040 1,050 1,020

Other South East 1,320 1,410 1,420 1,560 1,850 1,870 1,910 1,910 1,980 1,930 1,970 2,020 2,040 2,130

South West 410 400 420 440 560 610 650 730 750 840 850 870 880 870

England 5,250 5,190 5,200 5,410 6,590 6,830 7,090 7,390 7,660 8,050 8,200 8,380 8,460 8,480

Wales 230 230 240 270 350 370 390 420 430 390 400 410 410 440

Scotland 320 340 320 360 450 480 500 520 540 640 660 670 680 700

Northern Ireland 90 100 90 90 110 120 120 120 120 120 140 140 150 180

United Kingdom 5,890 5,860 5,850 6,130 7,500 7,800 8,100 8,450 8,750 9,200 9,400 9,600 9,700 9,800

¹ Excludes option mortgage scheme (1979–80 to 1983–84).

² Provisional.

³ Higher rate relief was abolished in 1991–92.

§ Ms Harman
To ask the Chancellor of the Exchequer what are the most recent figures for the number of non-taxpayers who are claiming mortgage interest relief at source, in the United Kingdom; and how much this is costing the Exchequer.

§ Mr. Dorrell
MIRAS is available on all qualifying mortgages regardless of the tax status of the mortgagor. A tentative estimate, based on the 1991 family expenditure680W survey, is that there are about 1 million non-taxpayers receiving mortgage interest relief at source in 1992–93 at a cost of some £360 million.

Limit on size of loan	Cost (yield) of from increasing (decreasing) the ceiling on mortgage interest tax relief at 1992–93 levels
£	£ million
40,000	600
35,000	400
32,000	200
31,000	100
29,000	(100)
28,000	(200)
25,000	(500)
20,000	(1,100)

Cost of mortgage interest relief²
£ million
	1979–80	1980–81	1981–82	1982–83	1983–84	1984–85	1985–86	1986–87	1987–88	1988–89	1989–90	1990–91	1991–92² ³	1992–93²
Northern	60	80	70	95	100	140	180	200	210	250	310	350	310	230
Yorkshire	110	155	150	160	210	260	340	350	360	370	460	510	450	340
North West	135	200	180	215	260	330	440	490	510	530	690	770	640	500
East Midlands	85	115	110	130	180	230	300	320	330	340	430	480	410	340
West Midlands	145	160	190	170	230	280	370	350	360	430	550	620	510	400
East Anglia	45	50	60	75	90	130	170	170	180	220	270	300	250	180
Greater London	235	280	290	260	400	500	670	620	650	780	980	110	710	740
Other South East	375	555	600	650	740	950	1,270	1,220	1,260	1,350	1,750	1,940	1.510	1,390
South West	110	140	170	140	230	300	400	380	400	520	660	730	570	480
England	1,300	1.735	1,820	1,900	2,440	3,120	4,140	4,100	4,260	4,790	6,100	6,800	5,360	4,600
Wales	45	65	80	80	110	150	200	210	220	180	240	270	230	190
Scotland	85	125	120	140	190	260	350	300	310	370	470	530	420	340
Northern Ireland	20	35	30	30	40	50	60	60	60	60	90	100	90	70
United Kingdom	1,450	1.960	2,050	2,150	2,780	3,580	4,750	4,670	4,850	5,400	6,900	7,700	6,100	5,200
¹ Excludes option mortgage scheme (1979–80 to 1983–84).
² Provisional.
³ Higher rate relief was abolished in 1991–92.

Cost of mortgage interest relief at 1979–80 prices¹
£million
	1979–80	1980–81	1981–82	1982–83	1983–84	1984–85	1985–86	1986–87	1987–88	1988–89	1989–90	1990–91	1991–92^{2 3}	1992–93²
Northern	60	70	50	60	60	70	100	110	110	120	150	150	120	90
Yorkshire	110	130	110	110	130	140	200	190	190	190	220	220	180	130
North West	135	170	130	140	160	180	250	260	260	270	320	340	260	190
East Midlands	85	100	80	90	110	120	170	170	170	170	200	210	160	130
West Midlands	145	140	140	110	140	150	210	190	190	220	260	270	200	150
East Anglia	45	40	40	50	60	70	110	90	90	100	130	130	100	70
Greater London	235	240	220	170	250	270	380	340	340	390	460	480	280	280
Other South East	375	470	450	430	470	510	720	660	660	680	820	850	600	530
South West	110	120	130	100	150	160	230	210	210	260	310	320	230	190
England	1,300	1,480	1,350	1,260	1,530	1,670	2,360	2,220	2,220	2,410	2,870	2,970	2.130	1,760
Wales	45	60	60	50	70	80	110	120	120	90	110	120	90	70
Scotland	85	110	90	90	120	140	200	160	160	180	220	230	170	130
Northern Ireland	20	30	20	20	20	20	40	30	30	30	40	40	40	30
United Kingdom	1,450	1,680	1,520	1,420	1,740	1,910	2,710	2,530	2,530	2,710	3,240	3,360	2,430	1,990
¹ Excludes option mortgage scheme (1979–80 to 1983–84).
² Provisional.
³ Higher rate relief was abolished in 1991–92.

Number of mortgagors¹
Thousands
	1979–80	1980–81	1981–82	1982–83	1983–84	1984–85	1985–86	1986–87	1987–88	1988–89	1989–90	1990–91	1991–92^{2 3}	1992–93²
Northern	280	280	290	310	380	390	410	420	440	520	540	550	560	560
Yorkshire	580	570	560	560	680	700	730	740	770	770	780	800	800	780
North West	730	730	720	750	900	940	970	1,000	1,040	1,110	1,140	1,160	1,180	1,130
East Midlands	380	380	420	450	560	590	610	650	680	660	670	680	690	750
West Midlands	610	540	530	510	630	660	690	730	750	860	870	890	890	870
East Anglia	190	160	180	210	260	270	280	310	320	350	360	370	370	370
Greater London	750	720	660	620	770	800	840	900	930	1,010	1,020	1.040	1,050	1,020
Other South East	1,320	1,410	1,420	1,560	1,850	1,870	1,910	1,910	1,980	1,930	1,970	2,020	2,040	2,130
South West	410	400	420	440	560	610	650	730	750	840	850	870	880	870
England	5,250	5,190	5,200	5,410	6,590	6,830	7,090	7,390	7,660	8,050	8,200	8,380	8,460	8,480
Wales	230	230	240	270	350	370	390	420	430	390	400	410	410	440
Scotland	320	340	320	360	450	480	500	520	540	640	660	670	680	700
Northern Ireland	90	100	90	90	110	120	120	120	120	120	140	140	150	180
United Kingdom	5,890	5,860	5,850	6,130	7,500	7,800	8,100	8,450	8,750	9,200	9,400	9,600	9,700	9,800
¹ Excludes option mortgage scheme (1979–80 to 1983–84).
² Provisional.
³ Higher rate relief was abolished in 1991–92.