How Does Section 24 Affect Child Benefit for High-Earning Landlords?

Section 24 is usually described as a rental-profit problem. The quieter damage is what it does to your adjusted net income, the figure HMRC uses to test the High Income Child Benefit Charge. Because you can no longer deduct mortgage interest from rental profit, your taxable property income is inflated well above the cash you actually keep, and that inflated figure is what counts for child benefit. The result is a landlord who has had no real pay rise, whose mortgage costs have risen, and who is suddenly repaying child benefit they thought was safe.

This page sets out exactly how the section 24 child benefit interaction works in 2026/27, who it catches, and the practical levers that reduce the charge. Throughout, the threshold figures are the post Finance Act 2024 numbers (£60,000 and £80,000), not the older £50,000 limit that many online guides still quote.

What is the High Income Child Benefit Charge in 2026/27?

The HICBC is a tax charge that recovers child benefit from higher earners. It bites on adjusted net income above £60,000. For every £200 of income over that line you repay 1% of the child benefit received, so the clawback is complete once adjusted net income reaches £80,000. These thresholds were lifted from £50,000 and £60,000 by Finance (No. 2) Act 2024 and have applied since 6 April 2024.

Current child benefit rates are £27.05 a week for the eldest or only child and £17.90 a week for each further child. A two-child family therefore receives roughly £2,337 a year, every penny of which is repayable at £80,000 of income. The charge falls on the higher-earning partner regardless of who actually receives the benefit, which is why a landlord whose spouse claims the benefit can still face the bill.

Adjusted net income	HICBC outcome (2026/27)
Up to £60,000	No charge. Child benefit kept in full.
£60,000 to £80,000	Partial clawback: 1% of child benefit repaid per £200 over £60,000.
£80,000 or more	Full clawback. The entire child benefit is repaid through self assessment.

Why Section 24 pushes landlords over the threshold

The trap is built into how adjusted net income is constructed. Adjusted net income is broadly your total taxable income from all sources, before the personal allowance but after a small number of reliefs such as gross pension contributions and Gift Aid. Crucially, it uses your taxable rental figure, and under Section 24 that figure no longer reflects mortgage interest.

Before the restriction, a landlord deducted mortgage interest from rent and only the net profit hit their income. Now the full rent counts as income and the interest comes back later as a 20% basic-rate tax reducer (the section 24 mortgage interest relief credit). That reducer cuts your tax bill, but it does nothing to your adjusted net income. So the very mechanism that took away your mortgage interest deduction is the mechanism that inflates the figure used for the HICBC.

This is also why the charge can hit a landlord who is barely a higher-rate taxpayer on paper. The gross rent is loaded into adjusted net income, the landlord mortgage relief arrives only as a credit, and a modest portfolio with a large interest bill can lift someone from comfortably under £60,000 to well over it. If you want the underlying mechanics, our guide to calculating the Section 24 tax credit step by step walks through the arithmetic.

Section 24 child benefit worked example

Take Priya, an employed landlord on a £52,000 salary with three buy-to-let flats. The properties produce £24,000 of rent a year and carry £16,000 of mortgage interest. She and her partner claim child benefit for two children.

Under the old rules her rental income would have been £24,000 minus £16,000, so £8,000. Added to her salary that is £60,000, sitting right on the threshold with no charge. The cash and the tax figure matched.

Under Section 24 the position is very different:

• Taxable rental income: £24,000 (no interest deduction)
• Adjusted net income: £52,000 + £24,000 = £76,000
• Section 24 reducer received: £16,000 × 20% = £3,200 off her tax bill
• HICBC: £76,000 is £16,000 over the threshold, so 80% of the child benefit is repaid (£16,000 ÷ £200 = 80%)

Priya's real spendable income is still only about £60,000 once the genuine mortgage cost is paid, yet she now repays roughly £1,870 of the family's £2,337 child benefit on top of a higher income tax bill. That gap between cash reality and the taxed figure is the whole problem, and it is what makes the section 24 impact on cash flow so much sharper for landlords with children than the headline rate suggests. For a fuller portfolio illustration see our Section 24 versus incorporation comparison.

How to reduce the charge: practical levers

There is no way to make rental income disappear from adjusted net income while you hold property personally, but there are legitimate ways to bring the figure down. The right mix depends on your wider position, so treat these as components of a plan rather than a menu to pick one item from.

Pension contributions: the cleanest lever

A personal pension contribution reduces adjusted net income pound for pound on a grossed-up basis, which makes it the most direct tool for managing the HICBC. In Priya's case, paying £16,000 gross into a pension would take her adjusted net income from £76,000 back to £60,000 and remove the charge entirely, while also collecting higher-rate tax relief on the contribution. You are not conjuring new money; you are redirecting income that would otherwise be lost to clawback and tax into your own retirement pot. This is why pension planning for landlords sits at the centre of HICBC mitigation, and we cover the wider strategy in our note on Section 24 and pension contributions.

Moving income to a lower-earning spouse

If one partner earns well below £60,000, shifting beneficial ownership of a property towards them moves the rental income onto their tax return and lowers the higher earner's adjusted net income. Transfers between spouses are free of capital gains tax, and for a standard residential let with no mortgage assumed there is generally no stamp duty either. The documentation matters: HMRC tests beneficial ownership, and for jointly held property a Form 17 election is needed to depart from the default 50/50 split. Our guide to Section 24 and joint property ownership sets out how to split income correctly.

Considering a limited company

The incorporation versus Section 24 question often comes up at exactly this point, because a company pays corporation tax on rental profit after deducting the full mortgage interest, and company profits sit outside your personal adjusted net income until you draw them. That can solve both the Section 24 relief restriction and the HICBC in one move. It is not a free win: incorporation can trigger capital gains tax and stamp duty on transfer, brings ongoing compliance, and changes how you extract money. Whether a company beats Section 24 for you is a portfolio-by-portfolio modelling exercise, which we work through in the Section 24 versus incorporation analysis.

Gift Aid and timing

Gift Aid donations reduce adjusted net income in the same way as pension contributions, so charitable giving you were going to do anyway can be timed to keep you under £60,000 or £80,000. Where you have discretion over when rent is received or when a one-off cost falls, spreading income across tax years can also keep adjusted net income below a threshold in a spike year. These are fine-tuning tools rather than headline strategies, but they matter when you are sitting just over a line.

Should you opt out of child benefit?

Some landlords above £80,000 conclude there is no point claiming a benefit they will repay in full, and opt out to avoid the self-assessment admin. That is usually the wrong call. Opting out can cost the non-working or lower-earning partner National Insurance credits that protect their State Pension, and it forfeits Guardian's Allowance entitlement if circumstances change. The standard advice is to keep claiming, which also secures the child's automatic National Insurance number at 16, and simply budget for the repayment. If you genuinely never want the cash, you can claim and elect not to receive payments, which preserves the NI credits without the clawback.

Will Section 24 be reversed?

Landlords frequently ask whether the restriction is temporary. It is not. There is no announced plan to repeal Section 24 or restore full mortgage interest deductibility, and the question of whether it will be reversed has effectively been answered by Finance Act 2026, which carries the finance-cost reducer forward into the new rate structure rather than removing it. Planning on the assumption that Section 24 is permanent, and that the HICBC interaction is here to stay, is the only safe footing. Our standalone piece on the Section 24 tax relief rules covers the mechanics in full.

What changes in April 2027?

From 6 April 2027, property income is taxed at separate rates: 22% basic, 42% higher and 47% additional. These apply across England, Wales and Northern Ireland, with only Scotland carved out for 2027/28. Importantly, the Section 24 finance-cost reducer rises in step to 22% rather than staying frozen at 20%, so a basic-rate landlord sees no new wedge open and a higher-rate landlord's relief actually improves slightly.

For the HICBC, the construction of adjusted net income does not change. Your taxable rental figure still feeds into it, the gross rent still counts, and the reducer still arrives as a credit that does nothing to adjusted net income. In other words, the 2027 rate changes alter how much tax you pay on rental profit but leave the child benefit trap intact. We track the detail in our guide to Section 24 and 2027 tax-year planning for landlords.

Compliance, MTD and record keeping

Any landlord caught by the HICBC must report it through self assessment, and as a landlord you are already in the system for rental income reporting to HMRC. The charge is simply added to the same return. What changes the rhythm of this is Making Tax Digital for Income Tax, which is now live and brings landlords into quarterly digital reporting in stages: from April 2026 where qualifying income exceeds £50,000, from April 2027 at £30,000 and from April 2028 at £20,000.

The practical upside for HICBC planning is real. Keeping MTD software for landlords updated quarterly means you can project your adjusted net income with months to spare, rather than discovering at the filing deadline that you crossed £60,000. That early visibility is what makes a pension top-up or income shift possible before the tax year closes. Our guide to the Making Tax Digital deadline for landlords sets out what records you need and when.

Getting advice that joins the dots

The reason the section 24 child benefit interaction catches so many people is that it sits across three separate rule sets: the finance-cost restriction, the HICBC, and your wider income picture including pensions and any other earnings. Generic tax guidance tends to look at each in isolation. A property accountant who models adjusted net income alongside your rental profit, pension capacity and family circumstances can usually find a combination that protects the child benefit and the relief at the same time. If you are sitting just above £60,000, or expect to be after this year's rent reviews, it is worth running the numbers before the year end rather than after.