An online petition calling on the UK government to allow people to pay their mortgage through their wages before any tax or National Insurance deductions are made, in a similar way to pension contributions, has passed the support threshold that triggers an official response.
The petition, created and posted on the official petitions-parliament website by Aqad Zane, has received more than 23,000 signatures – the threshold is 10,000. At 100,000 signatures of support it would be considered for debate in Parliament.
The ‘Allow people to pay their mortgage through salary sacrifice’ petition proposes that amending the ‘salary sacrifice’ process “would allow more people to become mortgage-free sooner” and could help struggling households during the ongoing cost of living crisis.
It states: “The government should allow all mortgage contributions towards an individual’s main residence or family home to be made through salary sacrifice, prior to tax and national insurance deductions (similar to pension contributions).”
The petition continues: “This would allow more people to become mortgage free sooner in life and put more towards their and their children’s future. It could also help divorced couples, where people are having to start life all over again, on their own, at a late age.
“The rising cost of living and house prices makes paying off a mortgage extremely challenging for many people. The value of the mortgage that people could pay off using salary sacrifice could be capped, so that it only benefited those who are in need.”
The petition is open until August 28, 2023. – read it in full here.
Totally unfair on those who don’t have mortgages. Renters complain about ‘paying’ their landlord’s mortgage, but this would hand up to 45% tax relief to mortgagees. It would also push up house prices. Why not re-introduce MIRAS, which gave relief on the interest only. Still unfair, and pushed up prices [until Labour ended it], but better than this idea.
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I think if it included the rental sector then this would be a great idea. Also, MIRAS? I don’t know that acronym, sorry.
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MIRAS stood for Mortgage Interest Relief At Source, and was abolished in the 1990s. From memory it was a rebate borrowers received which effectively allowed a tax offset against mortgage interest.
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I can see benefits to this, especially if it was included to rent as well. I can see a lot of pitfalls in terms of admin, however if it was worked similar to the childcare schemes, this could work…
Basically for those who don’t use those schemes, the employer sends an agreed upon amount (which can be altered by the employee with 30 days notice) to the scheme before taxes are deducted. The money in that scheme however can only be sent to ‘approved’ providers, in this case the lender (or letting agent/approved or licensed Landlord). It can be set as an automatic payment every month, or you can make one-off payments. This means that if someone’s mortgage is £600 a month, they can have £620 deducted each month and then they can either make an lump-sum overpayment, or keep it there for when interest rates rise. I believe that you can request a refund, but the tax amount you would have paid is deducted first and sent (presumably) to HMRC. I suppose it can also be used in separations to prove who paid what towards the mortgage as well.
I’d be interested to know if anyone has any downsides that I might not have thought of?
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We are fast heading towards a time when people will abdicate all responsibility for their own actions and be unable to make a decision for themselves! What I do not understand is why people cannot just manage their own affairs without someone else holding their hands? I have had mortgages over the years and always managed to pay them myself, what is so difficult?
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I don’t think it is abdicating responsibility, I think it is about taking a cost which most people have to pay (especially if they include rent which I think they should) and removing it from what you pay tax on. You can’t deny that mortgage payments and house prices are a lot higher than they were, without the corresponding increase in income. So, allowing someone to remove their housing cost from their income before it is taxed makes sense. I realise that then people will say what about council tax, utilities, food etc which everyone has to pay, but a line must be drawn somewhere and housing IS the largest cost for most people. Using my suggestion above is not holding someone’s hand, as the employee still has to arrange, amend and track the payments themselves, just as they do at the moment from their bank account, but it is a way to help ease the cost of living.
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