What is Section 24?
Section 24 of the Finance (No. 2) Act 2015 changed how individual landlords are taxed on mortgage interest. Since April 2020, landlords who own property personally can't deduct mortgage interest from rental income. They pay income tax on the rent minus other costs, then get a tax credit worth 20% of the interest.
For a basic-rate taxpayer that often makes little difference. For a higher-rate taxpayer, interest that used to save 40% now saves only 20%. And because the full rent counts as income, the rent itself can push a landlord into the higher rate, cost them their personal allowance above £100,000, or leave them paying tax on a year that made no real profit.
A worked example
A landlord with five buy-to-lets earns £60,000 in rent, spends £9,000 on running costs and pays £30,000 in mortgage interest. They also earn a £55,000 salary. Their real profit is £21,000. The calculator above is pre-filled with this example: under Section 24 they pay far more tax on that profit than they would have under the old rules, and more than a company would pay in corporation tax.
Who is hit hardest?
- Higher and additional-rate taxpayers with high borrowing relative to rent.
- Landlords whose rent takes them over £50,270 or £100,000 of total income.
- Portfolio landlords with rising interest costs as cheap fixes end.
What can landlords do?
- Buy new properties in a limited company. Companies deduct mortgage interest in full and pay corporation tax. See limited company buy-to-let.
- Move the existing portfolio into a company. This can trigger stamp duty and capital gains tax, and incorporation relief only applies in some cases. See incorporating a property portfolio.
- Change who owns what, for example moving shares of property to a lower-earning spouse.
- Reduce or restructure debt, or refinance onto better rates to cut the interest bill.
Each option has costs as well as savings. Get tax advice from an accountant, and we'll arrange the finance side.
Changes announced for April 2027
The November 2025 Budget announced separate, higher income tax rates for property income from April 2027, 2 percentage points above the current rates, with the finance cost credit rising in line. This calculator uses 2026/27 rates. Check the current position with your accountant.
Frequently asked questions
Does Section 24 apply to limited companies?
No. Section 24 only restricts relief for individuals, partnerships and trusts. Companies deduct mortgage interest as a business expense and pay corporation tax on the profit.
Can I still claim mortgage interest as a landlord?
Individual landlords get a tax credit worth 20% of their mortgage interest instead of deducting it. The credit is limited to the lower of the interest, the property profits and your adjusted total income.
Is it worth moving my buy-to-lets into a limited company?
Sometimes. It depends on your tax rate, how much you borrow, your plans for the profits, and the cost of transferring (stamp duty, capital gains tax, new mortgages and early repayment charges). Use our portfolio restructure calculator and speak to an accountant.
Does Section 24 affect basic-rate taxpayers?
Less, unless the rental income pushes you into the higher-rate band. Because rent is counted before interest, it often does.