Building Society Interest
Mr. Craigen
asked the Chancellor of the Exchequer what is the estimated revenue for the current financial year of the amount of income tax levied on the interest on building society deposits, the amount which would be levied if this interest were taxed at the standard rate and the estimated cost of income tax relief on mortgage interest repayments.
Mr. Peter Rees
The estimated revenue is about £1,100 million, including higher rate tax. If tax on the interest were initially deducted at the basic rate the revenue would also be about £1,100 million, after taking into account higher rate tax and repayments to those liable at less than basic rate. The estimated cost of mortgage interest relief is about £1,450 million, which covers both building society and other mortgages.
Mr. Craigen
asked the Chancellor of the Exchequer if he will publish a table showing, for the current financial year, the impact on taxation yield of each percentage increase or decrease in the building societies' interest rates to borrowers and lenders for each percentage point between nine and 20.
Mr. Peter Rees
A one percentage point change in the interest rate payable by borrowers in 1979–80 would result in a change in mortgage interest relief of about £100 million. Each percentage point change in the tax paid rate of interest payable to lenders would lead to a change of about £130 million in the yield of tax at the composite and higher rates on this interest. These amounts are full year changes calculated at 1979–80 income levels. Larger changes would be approximately, but not exactly, in proportion. To produce exact figures would require an undue expenditure of time and resources.
Mr. Sproat
asked the Chancellor of the Exchequer what latest estimate he has made of the loss to the Inland Revenue of tax relief on mortgage interest in 1978, in the current year and in 1980, respectively.
Mr. Peter Rees
The information is: --------------------------
|1978–79|…|£1,110 million|
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|1979–80|…|£1,450 million|
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No estimate is available for 1980–81, since this will depend on the income tax rates and allowances, and on the amounts of allowable interest, in that year.