Section 24 Tax Calculator

Section 24 of the Finance Act 2015 stopped individual landlords deducting mortgage interest from rental income. Instead you pay tax on the full rental profit and receive a tax credit worth 20% of the interest. It was phased in from 2017 and has applied in full since April 2020.

Rather than reducing your taxable profit, the mortgage interest gives a credit equal to 20% of the interest, deducted from your tax bill. The credit is capped at 20% of your taxable property profit. For a basic-rate taxpayer this matches the old relief, but a higher-rate taxpayer effectively only gets relief at 20% instead of 40%.

Directly, no - the 20% credit equals their marginal rate. But because the full rent is added to income before the credit, the extra 'profit' can push a basic-rate landlord into the higher-rate band, or reduce child benefit or the personal allowance. Change the tax band above to see how the cost changes.

Common responses are holding property through a limited company (where interest is still fully deductible against corporation tax), paying down debt to cut interest, or transferring a share to a lower-earning spouse. Each has trade-offs and costs, so take advice. The limited company vs personal tool compares the two structures.