Section 24 is the finance-cost restriction that stopped individual landlords deducting mortgage interest from rental profit and replaced it with a basic-rate tax reducer. It has applied in full since the 2020/21 tax year, and the question we are asked more than any other is whether it will be reversed. The honest answer, and the one that should drive your planning, is that repeal looks unlikely, and the most recent legislation pushed the regime in the opposite direction.
This page is the policy-and-outlook view: what the odds of a Section 24 repeal actually are, why the politics and the public finances make reversal hard, and what leveraged landlords should do under the rules as they stand. If you want the mechanics of claiming the relief, the three-part cap and the SA105 box, that lives in our practical Section 24 claim guide. If you want the threshold-effect detail, see can Section 24 push you into higher-rate tax.
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Will Section 24 be reversed? The short, honest answer
No major party has committed to repealing Section 24, and the evidence from Finance Act 2026 (Royal Assent 18 March 2026) is that the direction of travel is entrenchment, not reversal. From 6 April 2027 the finance-cost reducer rises from 20% to 22%, moving in step with the new 22% basic rate on property income. A government planning to dismantle the restriction would not be wiring the reducer into the new rate architecture. It would be unwinding it.
So the realistic planning assumption is that Section 24 is here to stay. That does not mean nothing can change at the margin (partial tweaks are always possible), but it does mean that building a portfolio strategy around a hoped-for repeal is a weak bet. The landlords who have done best since 2020 are the ones who treated the rules as permanent and restructured accordingly.
Why repeal is unlikely: politics, revenue and direction of travel
Three forces sit against reversal, and they reinforce each other.
The politics. Section 24 was introduced by a Conservative government and defended as a fairness measure: a salaried worker cannot deduct their own mortgage interest, so why should a leveraged landlord deduct theirs against rental income at the higher rate? With housing affordability still acute and home ownership a live political issue, no front-bench party has found it worth the headlines to argue for restoring full higher-rate relief to landlords. The optics are simply poor.
The revenue. Restricting relief to the basic rate raises a meaningful sum for the Exchequer every year. Any Chancellor who repealed it would have to find that money elsewhere, in a fiscal climate where revenue is scarce and the property sector is a settled source of receipts. Established revenue is sticky. Treasuries rarely give up a working tax base voluntarily.
The direction of travel. This is the decisive point and the one most commentary misses. The Autumn Budget 2025 (26 November 2025) introduced separate property income tax rates, enacted by Finance Act 2026, and rather than freezing the Section 24 reducer at 20% while rates rose, the legislation lifted the reducer to 22% so it continues to match the basic rate. That is a deliberate design choice to keep the restriction coherent under the new rate structure. It is the legislative equivalent of pouring foundations, not packing up.
The April 2027 property rates and what they actually do to Section 24
There is a persistent myth that the April 2027 rate changes "make Section 24 worse" by opening a new wedge for basic-rate landlords. They do not, and it is worth being precise because the misunderstanding drives bad decisions.
From 6 April 2027, property income in England, Wales and Northern Ireland is taxed at 22% basic, 42% higher and 47% additional (only Scotland sets its own rates on property income). At the same time the Section 24 finance-cost reducer rises from 20% to 22%. Because the reducer tracks the basic rate, the relationship between the relief and the rate is unchanged.
The table below shows why no new basic-rate wedge opens. The "wedge" is the gap between your marginal rate on rental profit and the rate at which you get relief on the interest that funded it.
| Landlord | 2026/27 marginal rate | 2026/27 reducer | 2026/27 wedge | 2027/28 marginal rate | 2027/28 reducer | 2027/28 wedge |
|---|---|---|---|---|---|---|
| Basic rate | 20% | 20% | 0 pp | 22% | 22% | 0 pp |
| Higher rate | 40% | 20% | 20 pp | 42% | 22% | 20 pp |
| Additional rate | 45% | 20% | 25 pp | 47% | 22% | 25 pp |
The wedge is identical before and after. A higher-rate landlord still suffers a 20-point gap; an additional-rate landlord still suffers 25. What does change is that the headline rate on the rest of your property profit is two points higher, so the overall bill creeps up, but not because Section 24 got harsher. We unpack the rate change in full in our guide to the 2027 property income tax rates for landlords.
How Section 24 bites: a worked higher-rate example
The reason landlords keep hoping for repeal is that the cash effect is harsh for anyone with real gearing. Take a higher-rate landlord, employed at £55,000, with a portfolio generating £40,000 of rent against £24,000 of mortgage interest and £6,000 of other allowable costs. Figures are illustrative and rounded for clarity.
| Step | Old rules (pre-2017, full deduction) | Section 24 (2026/27) |
|---|---|---|
| Rent received | £40,000 | £40,000 |
| Less other allowable costs | (£6,000) | (£6,000) |
| Less mortgage interest | (£24,000) | Not deducted |
| Taxable rental profit | £10,000 | £34,000 |
| Tax on rental profit at 40% | £4,000 | £13,600 |
| Less finance-cost reducer (20% of £24,000) | n/a | (£4,800) |
| Net tax on the property business | £4,000 | £8,800 |
Under the old rules this landlord paid £4,000 of tax on £10,000 of real economic profit. Under Section 24 the same economic position generates £8,800 of tax. The extra cost is the 20-point wedge applied to £24,000 of interest, which is £4,800. The cash left after the mortgage has barely moved, but the tax bill has more than doubled. That is the mechanism, and it is exactly why mitigation matters more than waiting for repeal. The step-by-step arithmetic, including the three-part cap, is in our guide to calculating the Section 24 tax credit.
Note the secondary effect: the gross £34,000 rental profit is added to £55,000 of salary, taking total income to £89,000. Add a little more rent or a salary rise and this landlord crosses £100,000, where the personal allowance taper creates a 60% effective rate band. Section 24 does not just cost the wedge; it inflates the income figure that every threshold is tested against.
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What to do under the current rules
If repeal is off the table, the useful question is what actually reduces the impact. There is no single answer, because the right move depends on your marginal rate, your gearing and whether you intend to hold, grow or wind down. The realistic levers are below.
Incorporation into a limited company
Section 24 is an income tax rule and does not apply to companies, which deduct mortgage interest in full before corporation tax. For a heavily geared higher-rate landlord this is often the largest single lever. It is not free: incorporation can trigger SDLT on the properties moving into the company and CGT on the transfer (unless incorporation relief under TCGA 1992 s.162 is available and validly claimed, which since Finance Act 2026 must be actively claimed rather than applying automatically). The decision turns on whether the annual interest-relief saving outweighs the one-off costs over your holding horizon. We work the trade-off in the Section 24 versus incorporation comparison and in the complete guide to the buy-to-let limited company.
Pension contributions
Because Section 24 inflates your adjusted net income, a personal pension contribution can claw back basic and higher-rate relief and, where it brings income back below £100,000, restore some or all of the personal allowance. For a landlord hovering around the taper, the effective relief on a contribution can be very high. This works alongside, not instead of, the finance-cost reducer.
Beneficial ownership splitting
Where one spouse or civil partner is a basic-rate taxpayer and the other is higher-rate, shifting beneficial ownership of a property towards the lower earner moves rental profit into a lower band. For jointly held property the default split is 50/50 unless a Form 17 election aligns the income split to the actual beneficial split. This is documentation-sensitive and must reflect genuine beneficial ownership, not a paper exercise.
Leverage and financing structure
Lower gearing means a smaller restricted-relief figure, so where the numbers support paying down debt, the Section 24 cost falls with it. The interest-only versus repayment question matters here: only interest is a finance cost, so a repayment mortgage gradually shrinks the restricted amount while an interest-only loan keeps it constant. That is a cash-flow and risk judgement as much as a tax one, and there is no universally right answer.
What could change, and the indicators worth watching
Saying repeal is unlikely is not saying nothing will ever move. The plausible (though unannounced) directions are partial rather than wholesale: transitional relief for long-held portfolios, a higher reducer rate, or carve-outs in areas of acute rental shortage. None of these is on a published agenda for 2026/27 or 2027/28, and the FA 2026 design choice to lift the reducer to 22% suggests the government's preferred tool is calibration within the existing framework, not retreat from it.
The signals that would genuinely matter are a manifesto or fiscal-event commitment from a governing or near-governing party, a formal HMRC consultation on the finance-cost rules, or evidence in official housing-supply data severe enough to force a policy rethink. Until one of those appears, treat the regime as fixed and plan accordingly.
The bottom line
Section 24 is fully in force, the 20% reducer rises to 22% from April 2027 rather than disappearing, and no party has committed to repeal. The leveraged landlords who fare best are the ones who stop waiting and start structuring: testing incorporation on real numbers, using pension contributions to manage adjusted net income, and aligning ownership with the lower-rate spouse where it is genuine. If you would like a specialist to model your specific position, including the incorporation trade-off and the April 2027 transition, our property tax team can talk it through.