Petition Reintroduce mortgage allowance on personal tax

Ministers responded

This response was given on 25 November 2025

Mortgage Interest Tax Relief is likely to increase housing demand and – with no compensating increase in housing supply – is likely to be capitalised (at least partly) in higher house prices.

Mortgage Interest Tax Relief (MITR) provides tax relief for homeowners paying interest on loans relating to the purchase or extension of their main residence. It is currently available to taxpayers entitled to marginal relief (around 90% of personal taxpayers), for 2025 only.

The MITR calculation has two restrictions. Firstly, it is restricted to a maximum capital balance of £300,000. The second restriction is a cap on the amount of interest relief available to an individual. In the year of assessment 2023, around 10,000 taxpayers made a claim for MITR, reducing government revenue by around £9m.

International research has consistently shown that MITR:

• supports artificially high prices for housing that benefits current owners and creates unnecessarily high barriers to entry for new buyers;
• encourages the use of debt, with potentially negative consequences for financial stability and household finances;
• drives a wedge between the costs of owner-occupation and the rental market that primarily disadvantages those on lower incomes and with less capital available to them;
• provides the largest benefits to those with the highest debt and the highest incomes; and
• appears to be positively correlated to greater volatility in the housing market.

Budget 2016 proposed a slow phasing out of the relief. It stated:
“Research by the OECD and work by PWC for the Property Tax Review has pointed out that Mortgage Interest Tax Relief (MITR) is inefficient and counterproductive. There seems to be little supporting evidence for such subsidies, not least because they do not appear to impact on home ownership rates, and many advanced countries have consequentially removed such reliefs.

MITR is likely to increase housing demand and – with no compensating increase in housing supply – is likely to be capitalised (at least partly) in higher house prices. It encourages higher mortgage debt and tends to be regressive in nature (although the distributional consequences are complex, particularly in Jersey where the relief is only available for marginal rate tax payers) and may be disadvantageous to first time buyers. In addition, such relief will distort households’ investment and consumption choices, working against economic efficiency.”

Based on that research, the States Assembly agreed to phase out the relief starting from the year of assessment 2016. Initially, a cap of £15,000 on the relief was introduced. Since then, the cap has been reduced by £1,500 annually.

It is not clear at what level the petitioner envisions the allowance being reintroduced. In 2025, the last year the relief is available, the maximum available relief is £1,500. This equates to a reduction of around £390 in tax for the year.
As part of the Government’s response to cost-of-living pressures, Ministers have continually focused on helping all Islanders by increasing the personal tax thresholds, rather than providing a benefit only to homeowners with a mortgage at the expense of those who rent or own their home outright.

Ministers remain committed to helping Islanders struggling with the cost of living and believe it is more prudent to focus their efforts on carefully targeted interventions, aimed at those who need most help. This will not be achieved by continuing a discriminatory relief that benefits those who are better off and may contribute to housing inflation.

Reintroducing mortgage interest relief would target relief disproportionately at those with the highest incomes at a cost to the taxpayer of a minimum of £9m each year.

Although house prices are falling, and housing affordability is improving, any measure that could increase housing inflation and slow this progress, such as reintroducing MITR, would be to the detriment of the Island. MITR has been removed in the majority of OECD jurisdictions, including the UK, for these reasons.

Property in Jersey has consistently grown in value since records began. Those investing in property are therefore holding a significant asset, the capital value of which will continue to grow, upon which they are not taxed at the point of sale.

For these reasons, I do not propose to reintroduce MITR.