Landlord rental profit tax calculator, 2026/27

How this is calculated

Section 24 of the Finance (No. 2) Act 2015 removed the ability of individual landlords to deduct mortgage interest and other finance costs when working out taxable rental profit. Instead, taxable profit is calculated on rent less genuine operating expenses only, repairs, insurance, letting agent fees and similar costs, with interest excluded entirely from that calculation.

Once tax on that higher taxable profit has been worked out at your marginal rate, a flat 20% tax credit is given for the finance costs actually paid in the year, regardless of whether you are a basic, higher or additional rate taxpayer.

The practical effect is that higher and additional rate taxpayers get proportionately less relief for their mortgage interest than a basic rate taxpayer would, and in some cases the restriction pushes a landlord into a higher tax band even though their real cash profit has fallen because more of the rent is treated as taxable.

Why this differs from the general rental income calculator

This calculator specifically isolates the Section 24 mechanics for a mortgaged landlord: it excludes finance costs from taxable profit, then reintroduces relief only as a 20% credit against the final tax bill, and reports the net cash return after that tax.

The separate rental income tax calculator instead looks at gross personally-taxed rental income stacked on other income without applying this finance cost restriction, useful for a landlord without a mortgage or comparing personal tax exposure more generally.

Structuring options landlords consider

Because Section 24 hits higher-rate taxpayers hardest, some landlords consider incorporating a rental portfolio into a limited company, where mortgage interest remains a normal deductible expense against corporation tax. This involves potential capital gains tax and Stamp Duty Land Tax costs on transfer, which need weighing against the ongoing income tax saving.

Others reduce personal exposure by remortgaging to lower borrowing, transferring part ownership to a lower or non-taxpaying spouse, or accepting the lower net return as the cost of holding property personally rather than corporately.

What is the Section 24 mortgage interest restriction?

It is the rule, phased in from 2017 and fully in place since April 2020, that stops individual landlords deducting mortgage interest from rental profit. Instead they receive a flat 20% tax credit against their final tax bill.

Does Section 24 affect limited companies?

No. Companies that hold rental property deduct mortgage interest as a normal expense against corporation tax profit. Section 24 only applies to property held by individuals and most partnerships.

Can Section 24 push me into a higher tax band?

Yes. Because taxable profit is calculated before finance costs are deducted, some landlords find their taxable income crosses into the higher or additional rate band even though their actual cash profit after the mortgage is much lower.

Is it worth moving a rental property into a company to avoid Section 24?

It can be, but transferring an existing property usually triggers capital gains tax and Stamp Duty Land Tax, so the saving on future mortgage interest relief needs to be weighed against those upfront costs and ongoing company administration.