Thursday 29 September 2016

AIB u-turn means mortgage holders to get tax relief returned in lump sum

Charlie Weston and Adam Cullen

Published 06/04/2015 | 02:30

Mortgage holders left out of pocket by a major AIB blunder will now be paid back in full
Mortgage holders left out of pocket by a major AIB blunder will now be paid back in full

Mortgage holders left out of pocket by a major AIB blunder will now be paid back in full after the bank reversed its decision to reimburse customers over the course of a year.

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The State-owned bank backtracked on its initial response after some 1,600 customers lost out on mortgage interest tax relief last month.

AIB has now said it will pay back customers "as soon as possible".

However, the bank has been accused of only taking action in the wake of bad publicity.

Mortgage expert Karl Deeter said: "They are announcing now what they should have done in the first place.

"If the shoe was on the other foot they would be all over you like white on rice chasing up payment and adding extra fees."

He said AIB was reacting to the public furore over the weekend.

He added that if affected customers had not got their mortgage interest tax relief it would have represented a misappropriation of "Government funding".

"This tax relief for the taxpayer should be paid as such and not when AIB decide." An IT glitch at the bank meant mortgage customers whose payment went through on the last day of February did not get the tax relief they were entitled to.

To get mortgage tax relief the previous month's mortgage must have been paid.

Read more: Families overdrawn in AIB mortgage blunder

Mistake

This is a result of recent changes to avoid the situation whereby people benefited from tax relief even though they were not paying their mortgage.

As the last day of February fell on a Saturday, AIB's system did not process mortgage payments until the next working day, which fell in March.

This led to the system assuming no mortgage payment was made the previous month, so no tax relief was credited to mortgage accounts. Revenue blamed the bank for the mistake, insisting it had transferred the funds on time.

Some mortgage customers lost out on as much as €375 and their accounts were left overdrawn and facing further fees.

Initially, when the problem came to light, AIB said it would repay customers in instalments over the remainder of the year.

However, yesterday it backtracked and said mortgage holders would now be paid in a single lump sum.

A spokesperson for AIB yesterday said the tax relief would be paid "as soon as possible" and said it regretted "any inconvenience caused".

Irish Independent

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