Quick answer
Under Section 24, landlords of residential property can no longer deduct mortgage interest from rental income. Instead they receive a tax reduction worth 20% of finance costs, which hurts higher-rate taxpayers most.
Updated October 2026 · Figures based on 2025/26 rates
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How it works
Your taxable rental profit is calculated before finance costs. You then deduct 20% of the interest from your Income Tax bill, limited by property profits, adjusted income and the total finance costs.
Who is affected
Higher and additional-rate taxpayers lose the most, since relief at 20% replaces relief at 40% or 45%. Some landlords are pushed into a higher band because profit appears higher.
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What counts as finance costs
Mortgage interest, interest on loans to buy or improve property, and related fees. Capital repayments are not included.
Planning points
Review ownership, consider whether incorporation suits your situation, and take advice because capital gains, stamp duty and mortgage terms can outweigh the benefits.
Don’t leave your tax return to the last minute. Avoid penalties, save time, and let an expert take care of it for you.
Frequently asked questions
Does Section 24 apply to limited companies?
No. Companies can still deduct finance costs in full as an expense.
Does it apply to furnished holiday lets?
The furnished holiday let regime has been abolished from April 2025, so ordinary property rules now generally apply.
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