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Section 24 Tax Calculator
See how Section 24 (mortgage interest restriction) affects your tax bill as a landlord. Compare old rules vs current rules and calculate the additional tax you pay.
Your tax band is computed automatically — Basic rate (20%)
Additional Tax Due to Section 24
£0
Section 24 has no additional impact at basic rate
Tax (old rules)
£800
Tax (current rules)
£800
20% Tax Credit
-£1,200
Effective Tax Rate
8.0%
Before vs After Section 24
Old Rules (pre-2020)
Current Rules (Section 24)
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Frequently Asked Questions
What is Section 24 of the Finance Act 2015?
Section 24 removed the right for individual buy-to-let landlords to deduct mortgage interest from rental income before calculating tax. It was phased in from 2017 and fully in force since April 2020. Instead of a deduction, landlords now receive a 20% basic rate tax credit on their mortgage interest costs.
Who is affected by Section 24?
Only individual landlords holding property in their personal name are affected. Limited companies (SPVs) can still deduct mortgage interest in full and pay corporation tax on the net profit. Basic-rate taxpayers are largely unaffected by Section 24 — the main impact falls on higher-rate (40%) and additional-rate (45%) taxpayers.
Can Section 24 cause me to pay more tax than I earned in profit?
Yes. Because you declare the full rental income on your self-assessment (before deducting mortgage interest), this can push your apparent income into the higher-rate band even if your actual cash profit is modest or negative. In extreme cases where mortgage interest is high relative to rent, the tax bill can exceed the net rental income.
Does Section 24 apply to limited companies?
No. Section 24 only applies to individual landlords. Limited companies pay corporation tax on net rental profit after deducting mortgage interest, management fees, and all other allowable expenses. This is why many higher-rate landlords have incorporated into SPV structures in recent years.
What expenses can individual landlords still deduct under Section 24?
Individual landlords can still deduct all genuine rental expenses except mortgage interest. Allowable deductions include letting agent fees, buildings and landlord insurance, maintenance and repairs (not improvements), accountancy fees, legal costs for tenancy renewals, ground rent, and service charges. Mortgage interest is restricted to a 20% tax credit only.
Disclaimer: This content is for educational purposes only and does not constitute tax advice. Tax rules are complex, change frequently, and depend on individual circumstances. Always consult a qualified accountant or tax advisor (ACCA, ICAEW, or CIOT qualified) before making tax-related decisions.
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What is Section 24 and Why Does It Matter?
Section 24 of the Finance Act 2015 — commonly called the "landlord tax" — phased out the ability for individual buy-to-let landlords to deduct mortgage interest from rental income before calculating tax. It was fully in force from April 2020. Before Section 24, a landlord earning £12,000 in rent with £6,000 in mortgage interest only paid tax on £6,000. Now, they pay tax on the full £12,000 and receive a 20% tax credit on the interest instead.
For basic-rate (20%) taxpayers the maths roughly balances out. For higher-rate (40%) and additional-rate (45%) taxpayers, the effective tax rate on rental profit can exceed 100% — meaning some landlords now make a loss after tax on properties that were previously profitable.
The Three-Way Credit Cap
The Section 24 credit is not simply 20% of your mortgage interest. HMRC caps it at the lowest of: your mortgage interest, your net rental profit, or your taxable income above the personal allowance. This prevents landlords with near-zero taxable income from claiming a credit that exceeds their actual tax liability.
Who Is Affected?
Only individual landlords are affected. Limited companies (SPVs) can still deduct mortgage interest in full and pay corporation tax on net profit. This is why so many landlords have incorporated in recent years, though the costs and tax implications of transferring existing properties into a company need careful consideration.
Can Section 24 Push You Into a Higher Tax Band?
Yes. Because you now declare the full rental income (before mortgage interest) on your self-assessment return, this can push your total income into the higher-rate band even if your actual cash profit is modest. This is one of the most damaging aspects for landlords with large mortgages relative to rental income.