Section 24 is costing landlords thousands. How much is it costing you?
Since April 2020, mortgage interest is no longer tax-deductible for residential landlords. Instead you get a 20% credit. If you pay 40% tax, you’re paying the difference yourself. See exactly how much.
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How it works
What changed with Section 24?
Before April 2020, landlords could deduct mortgage interest from rental income before calculating tax — just like any other business expense. Section 24 replaced this with a 20% tax credit, fully phased in by April 2020.
Why higher-rate taxpayers are hit hardest
A higher-rate landlord (40% tax) with £10,000 mortgage interest used to save £4,000 in tax (40% of £10,000). Now they get a £2,000 credit (20% of £10,000), paying £2,000 more tax on the same mortgage costs.
What is still deductible?
Letting agent fees, property management, insurance, repairs and maintenance, ground rent and service charges, accountancy, and some legal fees. Capital improvements (adding value) are not revenue expenses — they reduce CGT on sale.
Property Allowance
Instead of itemising expenses, landlords with low rental income can claim the £1,000 Property Allowance. Useful if total allowable expenses are below £1,000 and administration isn't worth the effort.
Incorporation considerations
Moving properties into a limited company bypasses Section 24 — companies can still fully deduct mortgage interest. However, incorporation triggers SDLT and potentially CGT. Take specialist advice before incorporating.