EXPLANATORY NOTE
These regulations supplement sections 26 and 28 and Schedule 7 to the Finance Act 1982 which provide for a new scheme for giving tax relief on payments of mortgage interest. Form April 1983, or in some cases earlier, a person who pays certain categories of loan interest on which tax relief is due will normally be entitled to deduct and retain out of it a sum equal to income tax at the basic rate and the Inland Revenue will pay to the lender the amount of the deduction made.
Regulation 1 gives the title and commencement date and Regulation 2 defines terms used.
Regulation 3 specifies those loans which a borrower may bring within the new scheme and those where he needs to obtain authority from the Inland Revenue to deduct tax.
Regulation 4 enables lenders to bring into the new scheme certain loans made before 6 April 1983.
Regulation 5 sets out the circumstances in which the Inland Revenue may approve an application by a lender to begin operating the new scheme before 6 April 1983. Regulation 6, in relation to home improvement loans, and Regulation 7, in relation to loans which exceed the limit for tax relief (at present £25,000), provide for the lender to opt to bring such loans within the new scheme.
Regulation 8 enables lenders and borrowers to adjust periodic payments in respect of existing loans so that the amounts remain constant.
Regulations 9–14 provide procedures by which lenders may recover from the Inland Revenue the amounts deducted by borrowers.
Regulation 15 provides for a lender to supply a borrower with a certificate of interest within the scheme paid in any tax year.
Regulations 16 and 17 give the Inland Revenue power to obtain necessary information from any party to a loan agreement to which the scheme applies or from any person to whom a payment under Regulations 9–14 has been made. Regulation 18 provides standard penalties for failure to supply the information called for under Regulations 16 and 17.
Regulation 19 provides standard appeal procedures for borrowers against decisions and notices of the Inland Revenue.