by Asim Abbas
11 November 2026 
Section 24 and mortgage interest relief for landlords
Section 24 and mortgage interest relief for landlords
Since April 2020, individual landlords can’t deduct mortgage interest from rental income. Instead they get a tax credit at the basic rate, under rules known as Section 24.
- Mortgage interest isn’t deducted from rental profit
- Relief is a 20% tax credit instead
- Higher rate landlords lose half their relief
- Property income rates rise to 22%, 42%, 47% from April 2027
For higher rate landlords, this can mean paying tax on profits that don’t really exist, and it can push income over key thresholds.
This guide explains how Section 24 works, the planned changes from April 2027 and what landlords can do about it.
How Section 24 works
Finance costs, including mortgage interest, loan arrangement fees and interest on loans to buy furniture, are no longer deducted from rental income. Instead, you get a tax reduction of 20% of the lower of finance costs, property profits or your adjusted total income above the personal allowance. Unused credit can be carried forward.
Rob earns £45,000 from employment and has rent of £20,000, other costs of £4,000 and mortgage interest of £9,000. His rental profit for tax is £16,000, taking his income to £61,000. He pays 20% on £5,270 and 40% on £10,730, which is £5,346, less a credit of £1,800 (20% of £9,000). His tax on rental income is £3,546, even though his real profit after interest is only £7,000.
Knock-on effects
- Rental income can push you into higher rate tax
- It can trigger the Child Benefit charge above £60,000
- It can push income over £100,000, losing your personal allowance
- It counts towards Making Tax Digital thresholds through gross rent
Rental income tax calculator
See tax after Section 24.
Changes from April 2027
From 6 April 2027, property income will be taxed at separate rates of 22%, 42% and 47%. Relief for finance costs is due to be given at the property basic rate of 22%. Higher rate landlords will still get only a fraction of their real interest cost relieved.
Who isn’t affected
- Limited companies, which deduct interest in full
- Commercial property landlords
- Holiday lets were exempt until FHL was abolished in April 2025, but are now under Section 24 too
Fixed-fee accountancy support
Transparent monthly packages for sole traders, landlords and limited companies. Fixed fees agreed upfront, VAT included.
Get a fixed-fee quoteCall 0161 531 4179What landlords can do
- Transfer to a spouse: moving a share to a lower earning spouse can use their basic rate band, using Form 17 if ownership is unequal
- Pension contributions: extend your basic rate band
- Pay down debt: reduces interest that gets little relief
- Incorporation: companies get full deductions, but transferring property can trigger CGT and SDLT
- Review rents and costs: claim every allowable expense
Incorporation is rarely a quick fix. See our guide to property limited companies.
HMRC’s guidance on finance cost relief includes case studies. Our landlord tax returns service models your options.
What should I do next?
Interest and fees.
£50,270, £60,000, £100,000.
Spouse or company.
Frequently Asked Questions
Can landlords deduct mortgage interest?
Not as an expense. Individual landlords get a 20% tax credit instead.
Does Section 24 apply to limited companies?
No. Companies deduct finance costs in full.
What changes in April 2027?
Property income rates rise to 22%, 42% and 47%, with finance cost relief at 22%.
Does Section 24 apply to holiday lets?
Yes, since FHL rules were abolished in April 2025.
Should I move my properties into a company?
Not automatically. CGT and SDLT can apply, so get advice.
Need help with this? Wingate Accountants offers fixed-fee online accountancy support across the UK. Call 0161 531 4179 or request a quote at wingateaccountants.co.uk.
About the Author
Asim Abbas
I’m Asim Abbas, founder of Wingate Accountants and a Chartered Certified Accountant. I help sole traders, landlords and directors stay on top of their tax with fixed fees and plain-English advice.
