Tax grab could cost households £2,000 - Citizens' Advice Bureau

Thursday 22 October 2015

Households paying off mortgages could lose out by up to £2,000 per year under plans to phase out and scrap mortgage interest tax relief, the Citizens’ Advice Bureau has warned.

Ministers have unveiled plans to start phasing out the tax allowance that mortgage-payers get.

The interest tax relief currently costs the taxman £11 million per year – ministers want to start phasing it out in 2017, in proposals in the Budget, published yesterday.

Malcolm Ferey, the head of the Citizens’ Advice Bureau, says that the proposals put forward created another barrier to people looking to take their first steps on the housing ladder.

He said: “Sometimes you look at things and ask ‘is this going to be counter-productive?’.

“Homebuyers might be affected to the tune of around £2,000 per year that they will be losing out in tax relief, and for someone with a mortgage that’s a significant sum of money.

“Is that going to discourage people from purchasing their first property or subsequent properties, and will that slow the economy down?

“Ultimately people all still aspire to the dream of home ownership. It’s just that there are larger obstacles in their way than perhaps ever before because the price of housing has been out of reach for so many people for so long. This is another barrier.”