| Financial
Services > Mortgages
> Advice
> Tax
Relief
Past Governments have encouraged taking out mortgages via MIRAS
(Mortgage Interest Relief At Source) the giving of however this
tax relief was abolished from 6th April 2000. Without tax motivation
people are encouraged to pay off their mortgages as soon as possible,
which has had a strong impact on the types of mortgages that are
suitable, in particular Endowment
mortgages that have become less popular. Tax relief on the
interest paid on a mortgage to buy your main home.
If you need to talk to some one about tax relief, whether its personal
tax relief or you have set up a company and you need help, try our list
of providers.
Tax relief on your Investment
Up until 1984 if an endowment mortgage was taken out, a tax relief on
the amount you paid into an endowment policy was received. This tax relief
was also known as Life assurance premium relief, but was abolished in
1984 for the new and modified policies. At present a Pension mortgage
is the one of the policies to offer tax relief on the amount you pay each
month in savings to repay the mortgage.
Tax relief on the Mortgage
Tax relief on mortgage interest has been abolished from April 2000,
therefore reducing the possibility to borrow and reduces the possibility
to invest the borrowed money at a profit. The table below shows
how the tax relief on mortgage interest has changed over the years.
| Tax
Relief on Mortgage Interest
|
|
Tax year
|
Tax relief (available on interest on first £30,000 borrowed)
|
Effective
cost of each £100 of gross mortgage interest if you were a:
|
|
|
|
Basic rate tax Payer
|
Higher rate tax payer
|
|
1990-1
|
At your highest rate
|
£75
|
£60
|
|
1991-2
|
At the basic rate
|
£75
|
£75
|
|
1992-3
|
At the basic rate
|
£75
|
£75
|
|
1993-4
|
At the basic rate
|
£75
|
£75
|
| 1994-5
|
20%
|
£80
|
£80
|
| 1995-6
|
15%
|
£85
|
£85
|
| 1996-7
|
15%
|
£85
|
£85
|
| 1997-8
|
15%
|
£85
|
£85
|
| 1998-9
|
10%
|
£90
|
£90
|
| 1999-2000
|
10%
|
£90
|
£90
|
|
2000-2001
|
None
|
£100
|
£100
|
Inflation
Currently inflation is low and interest rates are above inflation but
are at their lowest for many years. This means that currently the cost
of borrowing money is a great deal cheaper than it has been over the last
20 years. During the late 1970's and early 1980's there were periods where
inflation was very high and interest rates were lower than inflation,
effectively people were paid to borrow, the costs of mortgages decreased
along with the value of their outstanding loans.
BACK TO ADVICE >>
|
RealVacances
Last
Minute & Special Offers