If you have a buy-to-let mortgage, MTD puts Section 24 in front of you four times a year. Here is what changes in your quarterly updates, including the one due 7 November 2026 (what to submit), and what does not.
We are Vaibhav and Iwona, the couple who built Padlord.
Section 24 in one paragraph
Since 6 April 2020, individual landlords cannot deduct residential mortgage interest from rental income. Instead they get a tax reduction worth 20% of the lowest of three figures: finance costs, property profits, or adjusted total income above the personal allowance. Any unused finance costs carry forward (GOV.UK). Companies are not affected. The full explanation is in our Section 24 guide.
What MTD changes
Interest is its own category, every quarter. Your quarterly update carries finance costs separately from repairs, fees and insurance. Even landlords with under £90,000 of property turnover using simpler categories must flag restricted finance costs (GOV.UK).
You record interest, not the payment. Record the interest part of each mortgage payment, or the full payment with an adjustment before you finalise the year. Capital repayments are never an expense.
The tax reduction is not applied in the quarter. Quarterly updates need no tax adjustments. The 20% reduction is worked out when you finalise the year in your tax return.
You get an in-year estimate. After each update, HMRC shows an estimate of your tax bill in your software or HMRC account. Treat it as a rough guide: it is only as good as the information HMRC has, and it will be off if you have other income it does not know about yet.
What MTD does not change
The amount of tax. Section 24 works exactly as before. MTD changes when and how you report, not what you owe.
A worked example (2026 to 2027, England)
A landlord earns a £60,000 salary and has one mortgaged flat:
- Rent for the year: £24,000
- Mortgage interest: £9,000
- Other allowable costs: £3,000
Cash profit before tax: £24,000 − £9,000 − £3,000 = £12,000.
Taxable property profit under Section 24: £24,000 − £3,000 = £21,000. The salary has already used the basic rate band, so this is taxed at 40%: £8,400.
Less the tax reduction: 20% × £9,000 = £1,800 (finance costs are the lowest of the three figures).
Tax on the flat: £6,600. That is 55% of the £12,000 actually kept.
In the quarterly updates the landlord simply reports rent, £3,000 of other costs and £9,000 of finance costs as they fall. The £6,600 only appears when the year is finalised. That is why the in-year estimate can be a nasty surprise if it includes figures you had not mentally budgeted for, and why it helps to model the year early with our Section 24 tax calculator.
(Bands used: personal allowance £12,570 and basic rate band to £50,270. Scottish taxpayers have different bands. Rates on property income are due to change from April 2027; see the 2027 property-income changes.)
Does a limited company avoid this?
A company deducts interest in full and is outside MTD for Income Tax. But moving existing property into a company is treated as a sale, with stamp duty and capital gains to consider. Run the numbers before you decide: limited company vs personal and the true cost of incorporating.
A quarterly habit for mortgaged landlords
- Download each lender's interest statement, or split the monthly payment into interest and capital.
- Record interest in the finance costs category, property by property.
- Check that refinance fees, broker fees and loan arrangement costs are also treated as finance costs: GOV.UK lists "fees and any other incidental costs for getting or repaying mortgages" as restricted.
- Compare the year-to-date interest to your expectations; rate changes at remortgage show up here first.
Where Padlord fits
Padlord is not MTD filing software. We built it so each property's mortgage, interest and cashflow sit next to its rent, and so the personal versus company maths is one click away. You keep the figures organised; your MTD software sends them. Try it free at www.padlord.co.uk.
General information, not tax or financial advice. Example figures are illustrative. Checked against GOV.UK on 13 October 2026.
