Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

I thank the Deputy for raising this matter. This is a matter for the Revenue Commissioners, who are responsible for the administration of mortgage interest relief through the tax relief at source system.

The Minister for Finance made a commitment in his budget speech of December 2011 concerning a new 30% rate of tax relief on interest paid that would apply to first-time buyers who took out their first mortgage in the period 2004 to 2008. Mortgage lenders provide this tax relief at source to relevant mortgage holders, facilitated by ongoing electronic data file transfers between Revenue and each of the 132 individual qualifying lenders. To apply the new 30% rate, specific technology developments were required to Revenue's computer systems and also to each of the lenders' computer systems. Revenue's systems were upgraded to implement the 30% rate last December and Revenue has since been engaging with the various lenders in regard to their IT enhancements.

Given the short time between the budget and the beginning of the tax year, it was to be expected that the implementation would take some time. However, the Minister was pleased to note that in January last, at the initiative of Revenue, lenders were authorised to grant tax relief at source at an interim rate of 25% to those entitled to the new 30% rate of relief. This was possible because a 25% rate was already a feature of the mortgage interest relief regime and was not dependent on new IT upgrades taking place. In other words, it already existed in the lenders' IT systems. The effect of this initiative was that the 189,011 mortgage holders who were the focus of this Government initiative benefited immediately from at least 25% relief.

The speed of upgrading IT systems has not been uniform across the lenders but, for example, by May, 109 lenders covering 107,664 cases or 57% of beneficiaries had applied the full 30% rate. To date the IT upgrades required to give effect to the 30% rate have been completed by 131 of the 132 lenders, covering 151,466 cases or just over 80% of beneficiaries. These lenders have implemented the increased rate for customers entitled to it, including any arrears. Revenue is in ongoing direct contact with the remaining lender, Ulster Bank, to ensure the additional 5% due to borrowers is paid within the current year as provided for in the regulations governing tax relief at source. While this is not what the Minister for Finance would have wished, the problems which this particular lender had with its IT systems this year are well known and have been described and discussed in the media throughout the year. In the circumstances, it was reassuring that the 25% interim rate was implemented by it. Revenue has advised me that it has received a commitment from the lender that the 30% rate applicable to 2012 will be implemented within the current tax year without requiring any action from mortgage holders.

As regards 2013, unfortunately, Ulster Bank has recently informed Revenue that it will not now be able to fully complete the necessary IT upgrades until March. This is most disappointing. The bank also informed Revenue that it will continue paying beneficiaries at the 25% rate for the months January to March 2013, inclusive, as it did this year, and will implement the 30% rate correctly, including arrears for the first three months, from April onwards. I hope, as I am sure the Deputy does, that this matter will finally be brought to a conclusion.

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