Section 24 has fundamentally changed how landlords complete their Self Assessment tax returns since April 2020. Instead of deducting mortgage interest from rental income, you now add it back to calculate profits, then claim a basic rate tax credit. This creates confusion for many landlords when filling out their SA105 property pages.

The Section 24 self assessment process affects every box on your property pages, from gross rents to tax calculations. Getting it wrong can lead to overpaying tax, underpaying tax, or triggering HMRC enquiries. Here's exactly how to handle Section 24 on your tax return.

What Section 24 Changed on Your Self Assessment

Before Section 24, landlords could deduct their full mortgage interest against rental income. A landlord earning £20,000 rental income with £8,000 mortgage interest would show £12,000 taxable profit.

Now, that same landlord must show the full £20,000 as taxable profit, then claim a separate tax credit of £1,600 (20% of £8,000 mortgage interest). The net effect is often higher tax, especially for higher-rate taxpayers.

This change affects three key areas of your Self Assessment:

  • How you complete the SA105 property pages
  • Your overall Income Tax calculation
  • The tax credits section of your return

Completing the SA105 Property Pages Under Section 24

The SA105 property pages contain specific boxes for Section 24 calculations. Here's how to complete each section correctly.

Property Income and Allowable Expenses

Box 7 (Rent and other income from property): Enter your gross rental income before any deductions. This remains unchanged from pre-Section 24 rules.

You can still claim most allowable expenses as normal in Boxes 17-28:

  • Letting agent fees
  • Legal and professional costs
  • Repairs and maintenance
  • Insurance
  • Safety certificates

However, mortgage interest is no longer entered in these normal expenses boxes.

Finance Costs (Box 29)

Box 29 is specifically for finance costs that qualify for Section 24 treatment. This includes:

  • Mortgage interest payments
  • Interest on loans for property deposits
  • Interest on improvement loans
  • Arrangement fees spread over the loan term
  • Interest on bridging loans
  • Interest on deposit loans from family
  • Mortgage interest on furnished holiday lettings (from April 2025)

Enter the total allowable finance costs here. This amount will be added back to your profit calculation but generates a tax credit instead.

Property Profit Calculation

Your property profit is calculated as: Rental Income minus Allowable Expenses (excluding finance costs). The finance costs in Box 29 don't reduce this profit.

For example, a landlord with £25,000 rental income, £5,000 other expenses, and £7,000 mortgage interest would show:

  • Property profit: £20,000 (£25,000 - £5,000)
  • Finance costs: £7,000 (in Box 29)
  • Tax credit available: £1,400 (20% of £7,000)

How Section 24 Tax Credits Work

The finance costs you enter in Box 29 generate a tax credit at the basic rate (20%). This credit reduces your overall Income Tax liability, but it's calculated differently from a normal deduction.

A basic rate taxpayer paying 20% tax gets full relief through the tax credit system. However, a higher rate taxpayer paying 40% tax only gets 20% relief, creating an effective tax increase. The tax credit appears in the "Tax reductions and reliefs" section of your Self Assessment, not on the property pages themselves.

Tax Credit Calculation Example

Consider a higher rate taxpayer with £30,000 property profit and £10,000 mortgage interest:

  • Taxable property income: £30,000
  • Tax at 40%: £12,000
  • Section 24 tax credit: £2,000 (20% of £10,000)
  • Net tax liability: £10,000

Under the old rules, they would have paid 40% tax on £20,000 profit (£8,000 total tax), showing the £2,000 annual increase from Section 24.

Common Section 24 Self Assessment Mistakes

Many landlords make errors when completing their Section 24 calculations. Here are the most common mistakes to avoid.

  • Including Finance Costs in Normal Expenses: The biggest error is entering mortgage interest in the normal expenses boxes (17-28) instead of Box 29. This prevents the tax credit from being calculated correctly and can trigger HMRC queries.
  • Missing Qualifying Finance Costs: Landlords often forget to include all qualifying finance costs in Box 29, such as arrangement fees or interest on bridging loans.
  • Incorrect Tax Credit Claims: Some landlords manually calculate and enter tax credits instead of letting HMRC's system calculate them automatically from Box 29. Always enter the finance costs and let the system generate the credit.

Section 24 and Different Property Types

Section 24 affects different property investments in varying ways, and this impacts your Self Assessment completion.

  • Buy-to-Let Properties: Standard buy-to-let properties are fully subject to Section 24 restrictions. All mortgage interest must go in Box 29 of SA105.
  • Commercial Properties: Commercial property investments are exempt from Section 24. You can still deduct mortgage interest from commercial rental income in the normal way, typically on the SA105 or as part of business accounts.
  • Property Development: If you're trading as a property developer rather than investing, Section 24 doesn't apply. Development finance costs remain fully deductible against trading profits.

Managing Multi-Property Portfolios

Landlords with multiple properties need to aggregate all their property income and finance costs on the SA105 pages. You don't complete separate SA105 forms for each property. Instead, combine all rental income in the income boxes and all mortgage interest in Box 29.

For example, a landlord with three properties generating £15,000, £18,000, and £22,000 rent respectively would enter £55,000 total rental income. If the mortgage interest is £4,000, £6,000, and £8,000 respectively, they'd enter £18,000 total finance costs in Box 29.

Tax Planning and Mitigation Strategies

While Section 24 increases tax for most landlords, there are some planning opportunities to consider when completing your Self Assessment.

  • Timing Capital Gains: Capital gains are taxed separately and aren't affected by Section 24. Landlords facing large Section 24 increases might consider realising capital gains in years with lower property profits. Remember, Capital Gains Tax rates for residential property are 18% (basic rate) and 24% (higher rate).
  • Spouse Income Splitting: Joint property ownership between spouses can help manage Section 24's impact by splitting rental income between different tax rates.
  • Incorporation: Many landlords consider incorporation into a limited company to avoid Section 24 entirely. Companies can still deduct mortgage interest fully against rental profits. Corporation tax rates are 19% on profits up to £250,000 and 25% on profits above this threshold.

Essential Record Keeping and Compliance

Proper record keeping is essential for accurate Section 24 Self Assessment completion. You need to maintain detailed records of all finance costs throughout the tax year.

Keep records of:

  • Monthly mortgage statements showing interest payments
  • Annual mortgage interest certificates from lenders
  • Loan arrangement fee documentation
  • Interest payments on family loans or bridging finance
  • Apportionment calculations for mixed-use properties

From April 2026, Making Tax Digital requirements will mandate quarterly digital record keeping for most landlords, making this documentation even more important.

Getting Professional Help and Future Changes

Section 24 calculations can become complex, especially for landlords with large portfolios or mixed property types. Many landlords benefit from professional support to ensure their Self Assessment is completed correctly. Property accountants can help with accurate SA105 completion, tax planning, incorporation analysis, and MTD compliance preparation.

Looking ahead, from April 2027, property income will be subject to separate tax rates (22% basic, 42% higher, 47% additional rate) rather than general income tax rates. This may interact with Section 24 tax credits in complex ways. Landlords should start planning for these changes now, as they may affect decisions about property retention, incorporation, or portfolio restructuring.

Understanding how to complete your Section 24 self assessment correctly is crucial for accurate tax compliance and optimal tax planning. The restrictions have fundamentally changed property investment taxation, but proper completion of your SA105 forms ensures you claim all available relief while meeting your obligations to HMRC.