The second resolution relates to mortgage interest relief. The tax relief is currently available for interest paid on qualifying loans relating to an individual's principal private residence subject to certain limits. The relief is granted at source by the lender under what is known as the tax relief at source or TRS system. The measure provided for in this financial resolution will curtail mortgage interest relief such that it will only be available for the first seven tax years from the date on which a mortgage is taken out. This means that any taxpayer who has received mortgage interest relief for more than seven tax years on an existing qualifying loan will no longer be eligible for such relief from 1 May 2009. It is important to stress that there is no change in tax treatment of interest paid on qualifying loans by first-time buyers because, by definition, there are in year 1 to year 7 of their first mortgage. In addition, they benefit at the rate of relief announced in the last budget, that is, 25% for years 1 and 2, 22.5% for years 3, 4 and 5 and 20% for years 6 and 7. However, tax relief will no longer be available for the eight year and subsequent years. For non-first-time buyers, the relief will continue to be available only up to the limit of seven tax years on each qualifying loan. This covers both existing qualifying loans and any new qualifying loans taken out from now on. The rate at which relief will be available is the 15% rate announced in the last budget.

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