Section 24 mortgage interest relief calculator, 2026/27

How this is calculated

Before April 2017, a landlord could deduct mortgage interest and other finance costs directly from rental income, along with all other allowable expenses, to arrive at a single taxable profit figure taxed at their marginal rate. Section 24, phased in between April 2017 and April 2020, removed that deduction entirely for individual landlords.

Under the current rules, taxable profit is calculated without deducting finance costs at all. Tax is then charged on that higher profit figure at the landlord's marginal rate, before a flat 20% tax credit is applied against the finance costs actually paid, regardless of whether the landlord pays tax at 20%, 40% or 45%.

This calculator runs both versions of the calculation side by side using identical income and interest figures, so the difference reported is purely the effect of the Section 24 restriction, not any other change in circumstances.

Who is affected most

Basic rate taxpayers are broadly unaffected in cash terms, because 20% relief given as a credit is roughly equivalent to a 20% deduction from taxable profit. Higher and additional rate taxpayers lose out, since they previously received relief at 40% or 45% on their finance costs but now receive only 20%.

Landlords with high borrowing relative to rental income are affected disproportionately, and in some cases the restriction can tip a landlord who was previously a basic rate taxpayer into the higher rate band, because taxable profit is now calculated before interest is deducted.

Responding to the restriction

Options landlords consider include incorporating a portfolio into a limited company, where interest remains fully deductible against corporation tax, transferring part of a property to a lower-earning spouse to use their basic rate band, or reducing borrowing where practical to lower the affected interest figure.

Each option carries its own costs and consequences, including potential Stamp Duty Land Tax and capital gains tax on incorporation or transfer, and should be modelled carefully rather than assumed to be an automatic improvement.

What exactly did Section 24 change?

It stopped individual landlords deducting mortgage interest and other finance costs from rental profit before tax. Instead, tax is calculated on profit before those costs, then a 20% tax credit is applied against the finance costs paid.

Am I worse off under Section 24 as a basic rate taxpayer?

Usually not by much, since a 20% credit is broadly equivalent to a 20% deduction for a basic rate taxpayer, unless the restriction pushes your income into a higher tax band.

Does Section 24 apply to companies?

No. Limited companies deduct loan interest as a normal expense against corporation tax profit and are not subject to the Section 24 restriction, which is one reason some landlords consider incorporating a portfolio.

Can Section 24 push me into a higher tax bracket?

Yes. Because taxable profit is calculated before finance costs are deducted, a landlord's reported income can be significantly higher than their real cash profit, sometimes moving them into the higher or additional rate band.