Family suffering the same cost of living pressures as everyone else is told they do not qualify for relief from surging interest ratesA single mother with two children has been denied the Government's one-off mortgage interest relief despite seeing her mortgage interest bill jump last year. Photograph: iStock
I do not think the interest relief should be based on your income or tax. It should be based on the increase of interest paid in one year compared to another. This scheme should not have gone through Revenue as it is not an income-based credit. Is there anything she can do at this point.You highlight a very unfortunate situation. As you point out, your sister-in-law sounds precisely like the sort of person that this tax credit was supposed to be helping.
Tax reliefs on the other hand generally operate earlier in the calculation, reducing the amount of income tax is taxable in the first place or else making you eligible for a repayment of tax already paid. The 2023 Finance Act – the legislation giving effect to those Budget 2024 measures – didn’t help by referring to “Mortgage Interest Relief” but then determining that it would be known as “mortgage interest tax credit”.
“An individual who proves that during the qualifying period he or she paid qualifying interest and makes a claim in that regard shall be entitled to a tax credit equal to the lesser of: the amount which reduces the claimant’s income tax to nil.”Someone may come back to put me wise on this but I do not see why the special once-off support for mortgage holders announced in the last budget could not have been applied in a similar manner. But it wasn’t.
I’m assuming from your reference to her mortgage interest certificates that she certainly qualifies in terms of facing higher mortgage interest charges and was not on the same fixed rate through this period. It possibly never crossed their mind that someone who would benefit from the measure – and who certainly finds themselves under cost of living pressure as a single mum of two suffering the same increase in mortgage rates as others – might not have an offsettable tax liability.