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Standard fears Revenue tax move will hit offset loans

Standard Life is warning that a tax crackdown by the Inland Revenue may mean that borrowers with an offset mortgage will have to register their loan with the Revenue.

Tax specialist Simon Burke says although there is no evidence that offset mortgages are being targeted, they do fall within the scope of regulation published two weeks ago.

The rules require big acc-ountancy firms to notify the Revenue in advance of any tax avoidance scheme they are about to implement.

Burke says he is concer-ned about the implications for retail customers of banks and insurance companies and fears it could scare borrowers away from offset mortgages.

One in four new borrowers opt for an offset mortgage, where savings are used to reduce the mortgage debt and the amount of interest paid. By not earning income by way of interest on savings, borrowers pay less tax.

Burke says he has joined forces with the British Bankers&#39 Association and the ABI which will raise the issue with the Revenue.

He says: “We do not want customers with an offset mortgage sending in a tax return and having to quote a taxavoidance scheme reference number. Some of them do not even have to send in a form.”

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