Navigate Section 24 mortgage interest restrictions with confidence. Comprehensive guides on tax relief changes, calculators, planning strategies, furnished holiday lets, and self-assessment for landlords.
Section 24 of the Finance (No. 2) Act 2015 fundamentally changed how individual landlords claim tax relief on mortgage interest. Since April 2020, individual landlords can no longer deduct mortgage interest from rental income before calculating tax. Instead, they receive a basic-rate (20%) tax credit on the interest paid.
This means the full rental income is taxed at your marginal rate, with only a 20% credit applied afterwards. For basic-rate taxpayers the effect is neutral, but higher-rate and additional-rate taxpayers face a significantly increased tax bill.
Higher-rate taxpayers at 40% only receive a 20% tax credit, effectively doubling the cost of mortgage interest. Additional-rate taxpayers at 45% fare even worse. Section 24 can also push basic-rate taxpayers into the higher-rate band because gross rental income — without the mortgage deduction — inflates total taxable income.
This knock-on effect can reduce eligibility for child benefit, erode the personal savings allowance, and remove access to marriage allowance — making the real cost of Section 24 far greater than the headline figures suggest.
To calculate your Section 24 position, start with gross rental income and deduct all allowable expenses except finance costs. Apply income tax at your marginal rate to the resulting profit. Then calculate 20% of your total finance costs and deduct this as a tax credit. The difference between these two figures represents your additional tax burden under Section 24.
Landlords with multiple properties should aggregate all rental income and finance costs across their portfolio before performing this calculation, as HMRC treats UK property income as a single business.
The most common mitigation strategy is transferring properties to a limited company, which is not affected by Section 24. Companies deduct mortgage interest as a business expense before corporation tax at 25%. However, incorporation triggers capital gains tax and stamp duty land tax on the transfer, so the numbers must be modelled carefully.
Partnership structures can also help where one spouse is a basic-rate taxpayer. By adjusting profit-sharing ratios, more income can be allocated to the lower-earning partner. Some landlords also consider reducing leverage or overpaying mortgages to shrink the finance cost caught by Section 24.
The Furnished Holiday Lettings (FHL) tax regime was abolished from 6 April 2025 (1 April 2025 for Corporation Tax) under the Finance Act 2025. Previously, FHLs were treated as trading income, allowing full mortgage interest deduction and bypassing Section 24 entirely. This exemption no longer applies.
From the 2025/26 tax year onwards, holiday let income is taxed identically to standard rental income. Section 24 mortgage interest restrictions now apply, capital allowances on new expenditure are no longer available (only Replacement Domestic Items Relief), and CGT business reliefs such as Business Asset Disposal Relief and rollover relief cannot be claimed. Landlords who previously relied on FHL status should review their tax position and consider whether incorporation or other mitigation strategies are appropriate.
From April 2027, property income faces separate tax rates (22% basic, 42% higher, 47% additional) instead of general income tax rates. This creates a mismatch with Section 24's 20% tax credit, potentially increasing costs for basic rate landlords.
Section 24 can artificially inflate your taxable income by restricting mortgage interest relief, potentially pushing you into higher tax brackets even when your actual cash flow remains the same.
Section 24 fundamentally changed how landlords can claim mortgage interest on rental property. Instead of full deduction, you now get a 20% tax credit capped at basic rate relief.
Section 24 restricts mortgage interest relief to a 20% tax credit. Understanding which finance costs qualify is crucial for calculating your tax liability accurately.
A step-by-step guide showing UK landlords exactly how to calculate their Section 24 tax credit, with worked examples and calculation formulas.
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Replacement domestic items relief allows landlords to claim tax relief when replacing furniture, appliances, and furnishings in rental properties. This relief replaced the old wear and tear allowance in April 2016.
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Section 24 mortgage interest restrictions often hit PAYE landlords particularly hard because employment income can push rental profits into higher tax bands. Understanding the combined impact is crucial for tax planning.
From April 2027, Section 24 rules change significantly for higher rate taxpayers, with property income taxed at separate rates including a new 42% higher rate band.
Section 24 mortgage interest restrictions can push landlords into higher tax bands by increasing taxable rental income, even when cash profits remain the same.
Section 24 affects both interest-only and repayment mortgages equally for tax relief, but the overall financial impact differs significantly. Interest-only mortgages may create higher tax bills but preserve capital.
Section 24 restrictions apply differently to joint property owners depending on ownership structure and tax elections. Understanding how mortgage interest relief is split can significantly impact your tax liability.
Section 24 mortgage interest restriction creates a cumulative tax burden across multiple rental properties, often pushing landlords into higher tax brackets and reducing overall portfolio returns.
Section 24 can push rental income above £100k, triggering loss of personal allowance and creating a brutal 60% marginal tax rate for affected landlords.
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Section 24 fundamentally changes how you complete your Self Assessment tax return, requiring mortgage interest to be added back to profits and claimed as a basic rate tax credit instead.
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Step-by-step Section 24 calculation for a landlord with £50k rental income, showing the real tax impact of mortgage interest restrictions and practical planning options.
Mortgage interest tax relief for landlords is now restricted to basic rate (20%) under Section 24 rules. This guide explains how the system works and what you can claim.
The Furnished Holiday Lettings tax regime was abolished from 6 April 2025. Holiday let income is now taxed like standard rental income, with Section 24 restrictions applying. Here's what landlords need to know.
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Section 24 has fundamentally changed UK property investment since 2017. We examine the political and economic factors that could lead to its repeal.
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Complete guide to all allowable landlord tax deductions in the UK for 2026/27. Covers property expenses, repairs, management costs and Section 24 mortgage interest rules.
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Many basic rate taxpayers assume Section 24 doesn't affect them. This isn't always true — the mortgage interest restriction can push you into higher tax brackets and reduce your take-home rental income.
A detailed case study examining how Section 24 mortgage interest restrictions impact a landlord with £100k annual rental income, including full tax calculations and strategic options.
Section 24 hits higher-rate taxpayers hardest, reducing mortgage interest relief to just 20%. This guide shows the real impact on landlords earning over £50,270 and practical strategies to manage the burden.
Section 24 restricts mortgage interest relief for individual landlords to basic rate tax only. This comprehensive guide explains how it works and what you can do about it.
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Section 24 has significantly increased the tax burden for many landlords. Our specialist property tax accountants can model your exact position, compare mitigation strategies, and help you make informed decisions about your portfolio's future.