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Mortgage Interest (Tax Relief)

Volume 976: debated on Tuesday 18 December 1979

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asked the Chancellor of the Exchequer, for a married man with two children, what is the increase in mortgage interest tax relief he receives with the rise in interest rate to 15 per cent. if his gross salary is£3,000,£5,000,£8,000.£12,000 and£20,000, assuming in each case a mortgage loan of three times the gross salary, and assuming in the case of the£20,000 salary man firstly that he is subject to the investment income surcharge of 15 per cent., and secondly that he is not.

[pursuant to his reply. 13 December 1979]: On the assumptions stated by the hon. Member and assuming that the additional interest payable is a new mortgage for a full year, the value of the consequential increase in the mortgage interest relief, in terms of tax, is as follows:

Value of additional relief in a full year
Income££
3,00032
5,000146
8,000234
12,000244
20,000 (Earned)378
20,000 (Investment)463
The figures are based on a new mortgage and the tax relief is limited where appropriate to the interest on£25,000 of the mortgage. When the mortgage is near the end of its term the value of the additional relief is much smaller.