Section 24 is the reason many landlords pay tax on profit they never make. Since it was fully phased in, individual landlords can't deduct mortgage interest from their rental income for residential property.
How it works
You're taxed on your rent minus your running costs, but not your mortgage interest. You then get a tax credit for the interest at the basic rate: 20% now, and 24% from 6 April 2027.
A simple example
Rent £36,000, running costs £6,000, mortgage interest £15,000. Real profit: £15,000. But you're taxed on £30,000. For a higher-rate taxpayer that's tax at 40% on £30,000 (£12,000), less a 20% credit on £15,000 (£3,000): £9,000 of tax on £15,000 of real profit. From April 2027 the higher rate on property income rises to 44%. Work out your own figures.
Who it hits hardest
- Higher and additional-rate taxpayers.
- Landlords with high borrowing relative to rent.
- Landlords whose rental income pushes them over £50,270 or £100,000, where the personal allowance starts to go.
What landlords look at
Ownership, structure, financing and how income is split can all affect the tax. Each option has its own costs and risks, and what suits one landlord can be a mistake for another.
Paying more than you expected? Speak to a specialist who works with landlords.
Frequently asked questions
Who is affected by Section 24?
Individual landlords and partnerships letting residential property with finance costs. It doesn't apply to companies or to commercial property, and since the furnished holiday lettings regime ended in April 2025 it applies to holiday lets too.
Can Section 24 push me into a higher tax band?
Yes. Because you're taxed on rent before mortgage interest, your taxable income can be much higher than your real income, which can push you into higher-rate tax, or reduce your personal allowance and child benefit.
Is Section 24 being reversed?
There's no sign of it. From April 2027 the credit rises to 24%, in line with the new property basic rate, but so do the tax rates on rental profits.
Request a call back
Tell us a little about your situation and we'll call you, usually within one working day, to understand what you need. If it would help, we'll then put you in touch with a landlord tax specialist. We'll always tell you who they are before passing on your details. We don't give advice ourselves, and there's no obligation.