How Does Section 24 Affect Your Self Assessment Tax Return?

Section 24 broke the link between your mortgage and your tax bill. You used to subtract mortgage interest from your rent and pay tax on the difference. Now you pay tax on the full rent, then HMRC hands back a credit worth 20% of the interest. On paper it sounds neutral. On a Self Assessment return it changes almost every figure on your property pages, and it is the single most common place landlords get their tax wrong.

This guide walks the SA105 line by line, shows the finance-costs box where mortgage interest belongs, and works through the numbers for both basic-rate and higher-rate landlords. It also covers the traps that catch people: the profit add-back tipping you into a higher band, the credit cap in low-profit years, and the changes coming with Making Tax Digital and the 2027 property rates.

What Section 24 actually changed on your return

Before the restriction, a landlord with 20,000 pounds of rent and 8,000 pounds of mortgage interest declared 12,000 pounds of taxable profit. Simple subtraction.

Under Section 24 that same landlord declares the full 20,000 pounds (less any non-finance expenses) as taxable profit, and separately claims a tax credit of 1,600 pounds, being 20% of the 8,000 pounds of interest. The mortgage interest restriction does not reduce your profit at all; it reduces your tax afterwards, and only at the basic rate.

That single mechanical change ripples in three directions:

• Your SA105 figures. Mortgage interest leaves the expense boxes and moves to its own finance-costs box.
• Your headline income. Adding the full rent back can push you up a tax band, into the personal-allowance taper, or into the High Income Child Benefit Charge, even though your real cash position has not improved.
• Your relief. Higher-rate and additional-rate landlords get relief at 20%, not at their marginal rate, so the same interest costs them more in tax than it used to.

For the wider mechanics and worked figures across different incomes, see our complete guide to Section 24 tax relief. This page focuses on getting the return itself right.

Completing the SA105 property pages under Section 24

The SA105 is the property supplement to your main SA100 return. The online version uses the same logic with on-screen labels instead of box numbers. Work through it in this order.

Step 1: Total rental income, before any interest

Enter your gross rent for the year in the property income section. Add up every UK residential let; do not net mortgage interest off first, and do not file a separate SA105 for each property. One form aggregates all your UK property income.

Step 2: Ordinary running costs in the expense boxes

The usual landlord tax deductions still come off your rent in the normal way. These are unrestricted:

• Letting agent and management fees
• Repairs and maintenance (not improvements)
• Landlord and buildings insurance
• Gas, electrical and other safety certificates
• Ground rent, service charges and council tax on void periods
• Accountancy and legal fees on lettings

What does not go here is residential mortgage interest. That is the whole point of Section 24.

Step 3: Mortgage interest in the residential finance-costs box

Enter 100% of your allowable residential finance costs in the residential property finance-costs box. On the 2025/26 paper SA105 that is box 44; it has moved over the years, so on the online return follow the label "Residential property finance costs" rather than chasing a fixed number. Allowable finance costs include:

• Mortgage and remortgage interest on buy-to-let loans
• Interest on loans used to buy or improve let property
• Interest on a deposit loan, including from family, where genuinely used for the property
• Interest on bridging and development-bridge finance on lets
• Loan arrangement and broker fees, spread over the term of the loan

You enter the gross figure here. There is no box where you calculate the credit yourself, and you should not. HMRC works it out from this number.

Step 4: Let HMRC apply the credit

HMRC restricts relief to 20% of the lowest of three figures: your finance costs, your property profits, and your total income above your personal allowance. In a normal profitable year that is just 20% of your finance costs, and the reduction appears in the tax-calculation section of your return, not on the property pages. In a loss-making or very low-profit year the cap bites, and any finance costs you could not use are carried forward to set against future property profits rather than being lost.

SA105 boxes at a glance

This is where each part of a Section 24 return lives. Box numbers are for the 2025/26 paper form; check the current SA105 each year because HMRC renumbers it periodically.

What you are reporting	Where it goes on SA105	Section 24 effect
Gross rental income	Property income box	Full rent, no interest netted off
Letting agent fees, repairs, insurance	Ordinary expense boxes	Fully deductible from profit
Residential mortgage and loan interest	Residential finance-costs box (box 44 in 2025/26)	Restricted to a 20% credit, not a deduction
Commercial property loan interest	Ordinary expense boxes	Fully deductible, not restricted
The 20% tax credit itself	Nowhere on SA105	Calculated automatically in the tax computation

Worked example: basic-rate landlord

Priya has one flat. Rent of 14,000 pounds, running costs of 2,000 pounds, mortgage interest of 5,000 pounds, and a salary that keeps her within the basic-rate band even after the rent is added.

• Property profit declared: 12,000 pounds (14,000 minus 2,000)
• Finance costs in the finance-costs box: 5,000 pounds
• Tax on the 12,000 pounds at 20%: 2,400 pounds
• Section 24 credit: 1,000 pounds (20% of 5,000)
• Net tax on the property: 1,400 pounds

Under the old deduction rules she would have paid 20% on 7,000 pounds (12,000 minus 5,000 interest), which is also 1,400 pounds. For a landlord who stays firmly within the basic-rate band, Section 24 is broadly neutral. The exposure is band-creep: if the extra 5,000 pounds of declared profit ever pushes her over the higher-rate threshold, the maths changes immediately.

Worked example: higher-rate landlord

James is a higher-rate taxpayer through his employment. His portfolio produces 30,000 pounds of property profit after non-finance expenses, with 10,000 pounds of mortgage interest.

• Property profit declared: 30,000 pounds
• Finance costs in the finance-costs box: 10,000 pounds
• Tax on the 30,000 pounds at 40%: 12,000 pounds
• Section 24 credit: 2,000 pounds (20% of 10,000)
• Net tax on the property: 10,000 pounds

Under the old rules he would have paid 40% on 20,000 pounds of profit, which is 8,000 pounds. Section 24 costs him an extra 2,000 pounds a year, the gap between relief at his 40% marginal rate and the 20% he actually receives. This is the cash-flow squeeze landlords feel most: your tax bill can rise while your real profit, and sometimes your mortgage payments, do too. For the planning options that follow from this, see Section 24 versus incorporation, and which saves more tax.

The traps that distort a Section 24 return

Most Section 24 errors are not in the finance-costs box itself; they are in what the higher declared profit does to the rest of your return.

• Interest in the wrong box. Putting residential mortgage interest in the ordinary expense boxes gives full relief instead of the 20% credit. It understates your tax and is an inaccuracy HMRC can correct with interest and penalties.
• Band creep. The full-rent add-back can tip a basic-rate taxpayer into higher rate, so part of the same income is now taxed at 40% while relief stays at 20%. Model this before you assume Section 24 is neutral for you.
• The 60% trap. Once total income passes 100,000 pounds the personal allowance tapers away, creating an effective 60% rate on income between 100,000 and 125,140 pounds. Added rental profit can drag you into it.
• Child Benefit. Higher declared income can trigger or increase the High Income Child Benefit Charge even though your spendable income has not changed.
• Forgetting the carry-forward. In a low-profit or loss year the credit is capped and the unused finance costs carry forward. Landlords often drop them instead of recording them for future use.

Furnished holiday lets and Section 24 since April 2025

The furnished holiday lettings regime ended on 6 April 2025. Former FHLs are now taxed as ordinary residential property, which means their mortgage interest is restricted under Section 24 for the first time. If you used to claim full interest relief on a holiday let, that interest now belongs in the residential finance-costs box and attracts only the 20% credit. Check your prior-year treatment so you do not carry an old habit into a return that no longer allows it.

Where this fits with incorporation and pensions

A limited company is outside Section 24 entirely, so a company can still deduct mortgage interest in full against rental profit before corporation tax. That is the headline appeal, but incorporation brings stamp duty, capital gains tax on transfer, ongoing filing, and tax on extracting profit, so the comparison is rarely as simple as "no Section 24, therefore incorporate". Our buy-to-let limited company guide sets out the full picture before you act.

For landlords who stay personally held, the most reliable lever against the Section 24 squeeze is the one that reduces the income the restriction hits. A personal pension contribution extends your basic-rate band, which can pull rental profit back below the higher-rate threshold and restore full-rate relief on it. We cover this in Section 24 and pension contributions. Before filing, it is worth running your figures through our Section 24 calculator so you know the number, and whether any planning still has time to land, before the return is submitted.

Records, deadlines and Making Tax Digital

Section 24 lives or dies on the accuracy of your finance-cost figure, so keep the evidence that supports it: annual mortgage interest certificates from each lender, monthly statements, arrangement-fee paperwork, and any apportionment for part-residential or mixed-use loans.

The Self Assessment deadlines do not change because of Section 24. For 2025/26, paper returns are due by 31 October 2026 and online returns and any tax owed by 31 January 2027, with payments on account on 31 January and 31 July where they apply.

Making Tax Digital for Income Tax is now live and phasing in by income: from 6 April 2026 for landlords with qualifying income over 50,000 pounds, from 6 April 2027 over 30,000 pounds, and from 6 April 2028 over 20,000 pounds. You will keep digital records and file quarterly updates through compatible software, but the Section 24 mechanics are unchanged. Finance costs are still reported separately and the 20% credit is still applied at the final declaration. Our guide to Making Tax Digital for landlords and the April 2026 deadline covers what to do now.

What changes in April 2027, and what does not

From 6 April 2027 rental profits move onto separate property tax rates of 22% basic, 42% higher and 47% additional, enacted in Finance Act 2026 and applying across England, Wales and Northern Ireland (only Scotland is carved out for 2027/28). Crucially, the Section 24 credit rises from 20% to 22% at the same time, so it continues to match the basic property rate and no new basic-rate wedge opens up. The way you complete the SA105 does not change; you still report the full rent, claim ordinary expenses, and put finance costs in their own box. Only the percentages in the calculation move.

It is also worth keeping an eye on whether the restriction itself is ever softened. There is no announced repeal, and successive Budgets have retained it, so plan as though the 20% (soon 22%) credit is permanent. We track the position in our note on whether Section 24 will be repealed or reversed.

When to get it checked

If your return is a single flat that stays inside the basic-rate band, the steps above are usually enough. The point to get a second pair of eyes is when the add-back pushes you into higher rate, the 60% taper or the Child Benefit charge, when you hold a mix of residential and commercial property, when an FHL has just come into the restriction, or when you are weighing incorporation against staying personal. A property accountant can model those interactions, make sure the finance-cost figure and any carry-forward are right, and check the return ties up before it is filed. Used well, Section 24 is mechanical; the cost of getting it wrong is not.