Section 24 Tax Impact Calculator UK 2026
See how the Section 24 mortgage interest restriction affects your landlord tax liability
Higher rate taxpayers are most affected by Section 24
Understanding Section 24
Section 24 of the Finance Act 2015 fundamentally changed how UK landlords are taxed on their rental income. It removes the ability to deduct mortgage interest from rental income when calculating taxable profit.
The impact: Instead of deducting the full mortgage interest, landlords now receive a tax credit worth 20% of their mortgage interest. This effectively means higher and additional rate taxpayers lose out on 20-25% of their mortgage interest tax relief.
The workaround: Many landlords now operate through limited companies, where mortgage interest remains fully tax-deductible as a business expense. However, this involves different tax rules and potential Stamp Duty on property transfers.
Frequently Asked Questions
What is Section 24?
Section 24 of the Finance Act 2015 restricts how much mortgage interest landlords can deduct from their rental income. Instead of deducting the full interest, landlords now receive a 20% tax credit on their mortgage interest.
When did Section 24 come in?
Section 24 was phased in from April 2017 and fully applies since April 2020. Landlords can no longer deduct all their mortgage interest from rental income.
Who is worst affected by Section 24?
Higher and additional rate taxpayers are most affected because they lose the higher-rate tax relief on their mortgage interest. Basic rate taxpayers see less impact as the 20% credit roughly equals their 20% tax rate.
How can I avoid Section 24?
The most common workaround is to hold rental properties in a limited company structure. Company profits are taxed atCorporation Tax rates (currently 19-25%), not personal income tax rates, and the mortgage interest is fully deductible as a business expense.
Does Section 24 apply to all properties?
No - properties with no mortgage, or where the mortgage interest is paid by a tenant (service charge), may be exempt. Also, houses in multiple occupation (HMOs) have different rules.
Need to calculate your BTL tax as a limited company? Try our BTL Tax Calculator.
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