Section 24 changed how mortgage interest is treated for landlords who own property in their own name. Mortgage interest is no longer taken off rental profit. Instead you get a tax credit at the basic rate: 20%, rising to 22% from 6 April 2027 in England, Wales and Northern Ireland.
This free calculator shows how that changes the tax on one rental property for 2025/26, 2026/27 and 2027/28, with UK and Scottish income tax bands.
| Yearly rent | £12,000 |
|---|---|
| Other allowable costs | £2,000 |
| Mortgage interest | £6,000 |
| Tax on £10,000 profit at 40% | £4,000 |
| Less 20% credit on £6,000 interest | −£1,200 |
| Tax due on the property | £2,800 |
Next step
Work out the tax on a whole portfolio, with Section 24, the 2027 rates and the personal allowance, year by year.
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The rule that stops individual landlords deducting mortgage interest from rental profit. Instead, a tax credit equal to 20% of the interest is taken off the tax bill. It affects property owned in your own name, not through a limited company.
Often only a little, because the credit matches the basic rate. It can still push some landlords into a higher band, because rental profit is now counted before mortgage interest.
From 6 April 2027 property income is taxed at 22%, 42% and 47% in England, Wales and Northern Ireland, and the mortgage interest credit rises to 22% to match.
No. Companies deduct mortgage interest as a business cost and pay Corporation Tax on their profit. Whether a company suits a landlord depends on their wider situation, so many speak to an accountant.
Education, not advice. Rules change and depend on your circumstances. Check GOV.UK and speak to a qualified adviser before you act.