Section 24 Mortgage Interest Restriction Calculator 2026/27

See exactly how much extra tax you pay each year because of Section 24. Compares your current tax bill with the pre-2017 treatment that allowed full mortgage interest deduction.

Your rental finances

Total rent received from all UK residential properties.
Agent fees, insurance, repairs, void council tax. NOT mortgage interest.
Interest portion only (not capital repayment). Sum across all properties.
Salary, self-employment profit, dividends — anything else taxed in this year.

Current tax bill (with Section 24)

2026/27 treatment: 20% tax credit on mortgage interest
Tax on rental income
£0

Pre-2017 tax bill (without Section 24)

Old treatment: full mortgage interest deduction at marginal rate
Tax on rental income
£0
Important: This calculator uses 2026/27 HMRC tax bands and assumes the rental property is held individually (not in a limited company). It does not model the high-income child benefit charge, personal allowance taper above £100,000, capital gains, or stamp duty on portfolio incorporation. For a personalised analysis including all factors, book a free consultation with an AccTek property tax specialist.

How Section 24 works

Before April 2017, UK residential landlords deducted mortgage interest from rental income as a normal business expense. A higher-rate (40%) landlord with £15,000 of mortgage interest saved £6,000 in tax — the interest came off the taxable rental profit before tax was calculated.

Section 24, phased in between April 2017 and April 2020, ended this. Mortgage interest is no longer deductible from rental income. Instead, landlords receive a 20% tax credit on mortgage interest applied AFTER tax is calculated on the gross rental profit.

For the same higher-rate landlord with £15,000 of interest, the credit is worth only £3,000 — losing half the relief. For additional-rate (45%) landlords, the loss is even greater.

Who is affected

Strategies to reduce the impact

None of these are universally right. The decision depends on portfolio size, current marginal rate, age, and exit strategy.

Related reading: Accountant for Small Landlords UK · Property Investment Tax Guide · MTD for Landlords Readiness

Frequently asked questions

What is Section 24 and when did it start?

Section 24 of the Finance (No. 2) Act 2015 restricted UK landlords' ability to deduct residential mortgage interest from rental income. It was phased in from April 2017 to April 2020, replacing full marginal-rate deduction with a 20% tax credit. Higher-rate (40%) and additional-rate (45%) landlords with mortgages were worst affected — effectively losing half or more of their previous interest relief.

Does Section 24 apply to limited companies?

No. Section 24 applies only to individual residential landlords and partnerships of individuals. Limited companies holding buy-to-let property can still deduct mortgage interest in full against rental profit before Corporation Tax. This is why many higher-rate landlords have incorporated since 2017 — though incorporation triggers SDLT and CGT considerations.

Does Section 24 affect furnished holiday lets (FHLs)?

From April 2025, yes. FHLs had exemption from Section 24 until the FHL regime was abolished. From the 2025/26 tax year, former FHL properties follow standard residential rules — mortgage interest is restricted to a 20% tax credit. Landlords with FHL portfolios should review their tax position urgently.

How much does Section 24 cost a typical landlord?

For a higher-rate (40%) landlord with £15,000 of annual mortgage interest, Section 24 costs approximately £3,000 per year in additional tax. For an additional-rate (45%) landlord with the same interest, the cost is approximately £3,750 per year. Use the calculator above to model your specific situation.

Can I avoid Section 24 by transferring the property to my spouse?

Only partially. Shifting an income share to a lower-earning spouse can reduce the marginal rate on rental profit, reducing the Section 24 cost. The transfer requires a deed of trust and may need Form 17 election with HMRC. Paper transfers without genuine ownership change carry HMRC challenge risk.

Will Section 24 ever be repealed?

No major political party has indicated it would. Section 24 generates approximately £2 billion per year in tax revenue. Long-term landlords should assume the 20% credit treatment is permanent and structure portfolios accordingly — either accepting the restriction, incorporating, or reducing leverage.

Need help reducing your Section 24 tax cost?

Book a free 30-minute consultation with a chartered accountant specialising in landlord tax. We model income shifting, incorporation and deleveraging against your actual portfolio numbers.

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For official guidance, see HMRC's Section 24 worked examples and the official HMRC personal tax guidance. AccTek Ltd is an independent chartered accountancy firm and is not affiliated with HMRC.